Samsung Flags 35 Pct Slip in Q4 Profit, Misses Forecast

SEOUL, Jan. 9 (Korea Bizwire) – Samsung Electronics Co. on Tuesday predicted that its operating profit for the fourth quarter of last year would tumble 35 percent on year, hurt by persistently weak demand for its mainstay semiconductor division.

Samsung, the world’s biggest maker of memory chips and smartphones, estimated its fourth-quarter operating profit at 2.8 trillion won (US$2.1 billion), compared with a profit of 4.3 trillion won for the same period of 2022.

The forecast missed the average estimate of 3.9 trillion won from analysts surveyed by Yonhap Infomax, the financial data firm of Yonhap News Agency.

Fourth-quarter sales were also estimated to have declined 4.9 percent to 67 trillion won, Samsung said in a regulatory filing.

For all of 2023, Samsung expected its operating profit to plunge 85 percent to 6.54 trillion won.

It is the first time since 2008, when the global economy was hit by a financial crisis, that Samsung’s annual operating profit tumbled below 10 trillion won.

Last year, annual sales were predicted to decline 15 percent to 258.16 trillion won.

Analysts expected Samsung’s semiconductor division to report an operating loss of some 2 trillion won in the fourth quarter, with the division’s full-year operating loss predicted at some 14 trillion won.

SK Securities analyst Han Dong-hee told Yonhap Infomax that Samsung belatedly reduced its semiconductor production last year to ease a supply glut.

However, Samsung’s smartphone division is expected to report a solid profit last year due to strong sales of its flagship handsets, analysts said.

Shares of Samsung declined on the guidance. They shed 1.96 percent as of 2:20 p.m.

Although Samsung’s forecast missed the market consensus, some analysts said things turned around for Samsung’s chip division last year.

In 2023, Samsung’s quarterly operating profit continued to increase, from 640 billion won in the first quarter to 670 billion won in the second quarter, 2.43 trillion won in the third quarter and 2.8 trillion won in the fourth quarter.

“The balance of demand and supply for chips is getting better with new product releases of PC and mobile clients,” said Ryu Young-ho, an analyst at NH Investment & Securities Co.

(Yonhap)