ZCZC
BCN-11
SKOREA-SAMSUNG-ECONOMY-EARNINGS WRAP
Samsung Electronics flags near-30% slump in Q4 operating profit
SEOUL, Jan 8, 2019 (BSS/AFP) – Samsung Electronics on Tuesday flagged its
first quarterly profit drop in two years, painting a grim outlook amid
mounting competition from Chinese smartphone makers and declining chip
prices.
The South Korean tech giant — the world’s top maker of smartphones and
memory chips — has enjoyed record profits in recent years despite a series
of setbacks, including a humiliating recall and the jailing of its de facto
chief.
But operating profit during the October to December period was expected to
be around 10.8 trillion won ($9.8 billion), down 28.7 percent from a year
earlier, Samsung said in an earnings estimate.
The figure was below market consensus of about 13.5 trillion won, according
to market researcher FnGuide.
Sales dropped more than 10 percent to 59 trillion won in the period,
Samsung said.
It cited “lacklustre demand in the memory business and intensifying
competition in the smartphone business” for the dismal outlook.
“Memory earnings fell significantly… due to weaker-than-expected demand
amid inventory adjustments at data-centre customers,” it said.
That led to a drop in shipments and a “greater-than-expected” decrease in
chip prices, it added.
“We expect earnings to remain subdued in the first quarter of 2019 due to
difficult conditions for the memory business but strengthen in the second
half,” it forecast.
Samsung withholds net profit and sector-by-sector business performance data
until it releases its final earnings report, which is expected later this
month.
For 2018, the South Korean tech giant said it expects operating profit to
reach 58.9 trillion won, up nearly 10 percent from the previous year, and
sales to inch up 1.6 percent to 243.5 trillion won.
MORE/SR
ZCZC
BCN-12
SKOREA-SAMSUNG-ECONOMY-EARNINGS WRAP 2 LAST
Shares in Samsung Electronics, the flagship subsidiary of the giant Samsung
Group that dominates South Korea’s economy, rose 0.5 percent in early morning
trading.
– ‘Losing ground’ –
While Samsung leads the global smartphone market with a 20 percent share,
it faces mounting competition from Chinese rivals like Huawei — which
surpassed Apple in second place last year — offering quality devices at
cheaper prices.
“Samsung is losing ground to Huawei, Xiaomi and other Chinese rivals in the
huge China and India markets,” Neil Mawston, executive director at market
researcher Strategy Analytics, said in a report.
Samsung once also had a 20 percent market share in China but has seen its
sales tumble to less than one percent of the world’s largest smartphone
market in the third quarter, and last month announced the closure of its
factory in Tianjin.
The South Korean tech giant will reportedly roll out a new line up of its
flagship Galaxy handsets at next month’s World Mobile Congress in Barcelona
as it seeks to regain a competitive edge in a market segment it once
dominated.
It is also set to introduce the world’s first bendable smartphone in the
first half.
Samsung’s reputation suffered a major blow after a damaging worldwide
recall of its Galaxy Note 7 devices over exploding batteries in 2016, which
cost the firm billions of dollars and shattered its global brand image.
It also took another hit after the bribery conviction of Lee Jae-yong —
the son and heir of the group’s ailing current chairman Lee Kun-hee.
The 50-year-old scion was a key figure in the scandal that ousted former
South Korean leader Park Geun-hye following massive nationwide protests, and
was sentenced to five years in jail last year.
But Lee was released from jail in February last year after several of his
convictions were quashed on appeal.
BSS/AFP/SR/1850 HRS