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Business News/ Companies / Samsung Electronics Q4 profit sags as smartphone growth concern deepens
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Samsung Electronics Q4 profit sags as smartphone growth concern deepens

Samsung warns it would be difficult to increase earnings in first quarter as demand pulls back from year-end holiday period

October-December operating profit fell 6% on year to 8.3 trillion won, in line with a previous estimate of 8.3 trillion won, Samsung said in a statement on Friday. Photo: Bloomberg Premium
October-December operating profit fell 6% on year to 8.3 trillion won, in line with a previous estimate of 8.3 trillion won, Samsung said in a statement on Friday. Photo: Bloomberg

Seoul: Samsung Electronics Co. Ltd posted its first decline in quarterly profit in two years, hit by one-off special bonus as well as slowing smartphone sales as it braces for a year of tougher competition with rival Apple Inc.

The world’s biggest smartphone maker kept its full-year investment plan conservative and warned it would be difficult to increase earnings in the first quarter as demand pulls back from the year-end holiday period.

October-December operating profit fell 6% on year to 8.3 trillion won, in line with a previous estimate of 8.3 trillion won, Samsung said in a statement on Friday.

The figure was brought down by an 800 billion won special employee bonus to commemorate 20 years since chairman Lee Kun-hee announced a management strategy that the company regards as the catalyst to its recent growth.

It said a stronger won also hit profit, knocking off around 700 billion won.

Shares of Samsung Electronics, worth $204 billion, edged up 0.4% after the earnings release, compared with the benchmark index which fell 0.3%. The stock has fallen 8% in the past month on concern over slowing smartphone growth.

“It will be challenging for Samsung to improve its earnings in the first quarter as the weak seasonality of the IT industry will put pressure on demand for components and TV products," the company said in a statement.

Samsung said its 2014 capital expenditure, a barometer of broader technology industry demand for manufacturing tools such as chip equipment, will be similar to 2013’s 23.8 trillion won.

Operating profit at its cash cow mobile division stood flat at 5.47 trillion won, but slipped 18% from July-September’s record 6.7 trillion won as new iPhones drew away sales during the year-end holiday period.

Operating profit from display unit Samsung Display tumbled 90% to 110 billion won as weaker-than-forecast sales of the Galaxy S4 left smartphone screens sitting in the inventory, while subdued sales of television sets also had an impact on TV screen shipments. Reuters

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Published: 24 Jan 2014, 10:03 AM IST
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