Samsung said that despite the smartphone and tablet categories seeing “softening demand and intensifying competition” in 2016, it will look to increase shipments and maintain double-digit margins.
In a statement accompanying its Q4 results, it said it will achieve this “through releases of competitive devices and an optimised product portfolio”. For the premium segment, it is looking to “reinforce its market leadership and drive growth with differentiated and innovative products”, while for the mass market it will “focus on increasing shipments and profitability through competitive product lineups”.
As usual, the first quarter of the year will see a slowdown due to seasonality. The company said that an enhanced product mix, with the introduction of new lines such as its Galaxy A (2016) series, is expected to help stabilise sales and profitability, although shipments will decrease as old models are discontinued.
But as the year rolls on, the company said that tablets and wearables are expected to expand their contributions to overall business performance, while “new services such as Samsung Pay will continue to be developed”. The company is also bolstering its R&D operations for software and services.
Q4 operating profit for the company’s IT & Mobile Communications unit increased 13.8 per cent year-on-year to KRW2.23 trillion, on revenue which decreased 4.9 per cent to KRW25 trillion. But both of these figures marked a decline from the prior sequential quarter.
The South Korean company said a “slight” quarter-on-quarter decline in smartphone shipments was due to a year-end inventory adjustment, while the decrease in sales was the result of an increased proportion of sales coming from the mid- to low-end portfolio.
A seasonal increase in marketing expenses “slightly” impacted profit.
For tablets, the company said that quarterly shipments and sales increased due to seasonal demand and steady sales of Galaxy Tab A and Tab S2.
During the three months, it shipped 97 million handsets, with smartphones making up “roughly mid-80s per cent” of the mix. Tablet shipments stood at 9 million.
For its networks business, Samsung said the continued rollout of 4G LTE services in global markets “helped enhance its earnings for the quarter”. Looking ahead, it will look to build on its experience and actively expand its LTE position globally, it said.
On a group level, the company announced a profit of KRW3.22 trillion, down 39.8 per cent year-on-year, on revenue of KRW53.3 trillion, up 1 per cent. Operating profit of KRW6.14 trillion was up 16.1 per cent.
The company noted its Consumer Electronics unit saw a sharp increase in earnings, due to strong seasonality and “Black Friday” promotions in North America.
However, its earnings decreased across its semiconductor and display activities.
For the full year, net profit of KRW19.1 trillion was down 18.5 per cent, on revenue of KRW200.7 trillion, down 2.7 per cent. Operating profit of KRW26.4 trillion was up 5.5 per cent.