Samsung profit splutters on stunted sales - Mobile World Live

Samsung profit splutters on stunted sales

30 JAN 2020

Samsung Electronics placed 5G at the heart of its strategy for 2020, stating it would focus on expanding its portfolio of compatible smartphones and seek a greater slice of the global infrastructure market, as it revealed marginal revenue growth and a large decline in profit for Q4 2019.

In earnings documentation, the South Korean vendor blamed a “continued fall” in memory chip prices and weakness in its display panels unit for the drop in net profit: the figure declined from KRW8.46 trillion ($7.1 billion) in Q4 2018 to KRW5.23 trillion in the 2019 period.

Sales of KRW59.88 trillion were barely changed from the KRW59.27 trillion recorded in the final months of 2018.

Revenue from its mobile business grew from KRW22.19 trillion to KRW24.74 trillion. The vendor noted it “maintained profitability of our major smartphone line-ups, including the A Series” and predicted a “brighter” future for the current quarter “on better product mix from launches of new flagship models and foldable devices”. But, it warned operating profit may be impacted by “higher marketing expenses” associated with its push on high-tier models.

5G takeover
Over 2020 as a whole, Samsung predicted expansion in the specification of 5G devices, with demand for these models set to climb. The next-generation technology will be a bedrock of its smartphone launches this year, with at least one “new foldable design” in the works.

International markets became increasingly important to Samsung’s Network business in Q4 2019, with 5G sales picking up in markets including the US and Japan. It noted the bulk of domestic demand for next-generation kit peaked during H1 2019.

Semiconductor sales fell 10 per cent to KRW16.79: within this, memory chip revenue declined 15 per cent to KRW13.18 trillion. It predicted overall demand in memory chips would decline in the current quarter “due to low seasonality”, and tipped an increase in business for System LSI and Foundry products as launches of smartphones by “major customers” fuels demand for application processors, image sensors and DDIs.

Net profit in the full year more than halved from KRW44.34 trillion in 2018 to KRW21.74 trillion, with revenue dropping from KRW243.77 trillion to KRW230.4 trillion.

Semiconductor sales fell 25 per cent to KRW64.94 trillion and mobile increased 6 per cent to KRW102.33 trillion.



Michael Carroll

Michael doesn’t want to admit that he has been a journalist and editor for close to 20 years covering a diverse set of subjects including shipping and shipbuilding, fixed and mobile telecoms, and motorcycling...More

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