The flag of South Korean tech giant Samsung Electronics Co. flutters outside its headquarters in Seoul on Jan. 8, 2016. (Image : Yonhap)
SEOUL, Jan. 8 (Korea Bizwire) – South Korean tech giant Samsung Electronics Co. reported forecast-missing quarterly profit on Friday as sales of smartphones and memory chips remained sluggish.
Samsung said it probably posted an operating profit of 6.1 trillion won (US$5.08 billion) in the October-December period, up 15.3 percent from the 5.2 trillion won a year earlier but down 17.5 percent from the 7.3 trillion won the previous quarter.
Fourth-quarter sales were estimated at 53 trillion won, up 0.5 percent from the 52.7 trillion won a year earlier, according to the company’s earnings guidance.
The estimate hovered slightly below the market consensus of 6.5 trillion won by 16 South Korean brokerage houses, according to data compiled by Yonhap Infomax, the financial arm of Yonhap News Agency. The securities firms also suggested sales of 53.6 trillion won for the fourth quarter.
It marks the first time since the July-September period of 2014 for Samsung to post an on-quarter drop in operating profit, implying the firm’s recovery trend has lost steam.
For all of 2015, Samsung’s operating profit came to 26.37 trillion won, up 5.4 percent from the previous year, but sales dropped 2.9 percent to 200.34 trillion won.
However, Samsung posted annual revenue of more than 200 trillion won for the fourth consecutive year.
Samsung didn’t disclose its estimate for the fourth-quarter bottom line. The finalized earnings report, including the breakdowns for each sector, will be announced later this month.
Industry watchers said Samsung Electronics’ weaker on-quarter operating profit was the result of poor performances by both of its two profit pillars — chips and smartphones.
In the October-December period, Samsung did not enjoy foreign exchange gains.
The third-quarter operating profit was bolstered by the weakness of the local currency against the U.S. dollar, which gave Samsung a foreign exchange gain of 800 billion won.
While Samsung’s semiconductor division posted a record operating profit of 3.66 trillion won in the third quarter, industry watchers estimate the figure to be around 3.1 trillion won to 3.2 trillion won for the fourth quarter.
“(For the fourth quarter), the semiconductor business likely posted weaker-than-expected sales due to the weakening PC and smartphone industries,” said Kim Roko, an analyst at Hana Financial Investment Co.
Yoo Jong-woo, an analyst at Korea Investment & Securities Co., echoed the view, adding sluggish sales of Apple Inc.’s iPhones also weighed down the chip segment as well.
Industry sources said earlier that Apple is set to cut production of the iPhone 6s and 6s Plus by 30 percent for the first quarter of 2016.
Samsung’s IT and mobile businesses are estimated to have registered an operating profit of 2.1 trillion won to 2.3 trillion won in the fourth quarter, also down from the 2.4 trillion won posted in the July-September period.
Samsung’s sales of smartphones were estimated in the mid-80 million unit range, almost flat from three months earlier, but the rising portion of budget models in its lineup is feared to eat into its profitability, along with rising marketing costs.
The consumer electronics business, however, probably enjoy improved sales on the back of the year-end shopping season, posting an operating profit of at least 700 billion won, up sharply from 360 billion won three months earlier, according to analysts.
Shares of Samsung Electronics Co. traded 0.77 percent higher at 1,172,000 won as of 10:07 a.m. Friday, while the KOSPI lost 0.78 percent. The earnings guidance was released before the stock market opened Friday.’
(Yonhap)
