Samsung’s posts huge drop in Q4 earnings
Print Edition
SAMSUNG Electronics reported yesterday a bigger-than-expected decline in fourth-quarter earnings as its mainstay smartphone and semiconductor businesses suffered from weakening global demand for consumer electronics.
The South Korean company also warned a recovery in profit is unlikely during the first half of this year due to a tough business environment.
Samsung’s net profit for the October-December period plunged 40 percent from a year earlier to 3.2 trillion won (US$2.7 billion).
The result fell short of expectations, even after considering the negative impact from foreign currency exchange rates estimated at 400 billion won. A survey of analysts by financial data provider FactSet forecast net profit of 5.1 trillion won.
Sales edged up 1 percent to 53.3 trillion won for the quarter. Operating income rose 16 percent to 6.1 trillion won, in line with Samsung’s earnings preview earlier this month.
The latest results reflect additional challenges for Samsung as its semiconductor business, which helped offset declining earnings from smartphones since mid-2014, joined the mobile division in a profit slowdown.
Weakening global demand for smartphones and other consumer electronics products is taking a toll on Samsung’s sales of mobile components to companies such as Apple, as well as sales of Samsung’s own mobile devices.
The company is the world’s largest maker of memory chips that are used in PCs and mobile devices. It is also the world’s largest maker of smartphones and television sets.
For the full year, it earned 19.1 trillion won, down 19 percent from the previous year and the lowest level in four years. It was the second straight year with a drop in annual net income after the company’s earnings peaked at 30.5 trillion won in 2013.
During the final quarter of 2015, the semiconductor business reported its first quarter-on-quarter profit decline in more than one year. It logged 2.8 trillion won in operating income, about 25 percent lower than the previous quarter but slightly higher than a year earlier. In addition to the softer global demand for mobile devices and PCs, an oversupply of memory chips that pushed down prices also drove the weaker-than-expected profit growth.
The mobile phone business posted its second straight quarterly profit fall with 2.2 trillion won in operating income.
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