Samsung’s smartphone business suffered a double-digit decline in revenue in Q4 2018, as shipments and prices fell in a stagnant but highly competitive market, with the outlook for 2019 not bright.
Revenue in its Mobile unit, part of the IT and Mobile Communications division, dropped 11 per cent year-on-year to KRW22.2 trillion ($19.8 billion): for the full year sales were down 7 per cent to KRW96.5 trillion.
Lee Jong Min, VP of Samsung’s mobile communications business, said it will unveil the Galaxy S10 next month at an Unpacked event in San Francisco and expects its business performance to improve in the current quarter as a result of growth in sales of the new flagship model.
He said demand for smartphones in 2019 will remain flat, while market ASP is expected to increase due to a trend towards adopting high-end specifications including large displays, higher memory capacity and multiple-cameras: “We expect these business conditions to remain challenging due to a stagnant smartphone market and material cost burden.”
Its Networks business, however, reported gains on the back of 5G equipment installations and expansion of LTE networks.
The IT and Mobile Communications division posted an 8.4 per cent year-on-year decline in revenue in Q4 to KRW23.32 trillion. For the full year, consolidated revenue rose slightly to KRW100.7 from KRW100.3 in 2017.
Earnings in the division are likely to improve in the current quarter, helped by the planned launch of the new flagship Galaxy smartphone and an increase in the supply of 5G equipment in South Korea and the US, the company said.
On a group basis, Samsung’s net profit in Q4 dropped 39 per cent to KRW8.46 trillion, with consolidated revenue falling 10.2 per cent to KRW59.27 trillion.
Earlier this month it issued a profit warning regarding the quarter, pointing to weakness in the memory chip market.
Robert Yi, EVP of investor relations, said in an earning call the decline was greater than it anticipated due to a sharp drop in memory demand and a decline in smartphone sales.
Samsung expects demand in the memory business to remain weak in the current quarter due to seasonality and macroeconomic uncertainties, along with inventory adjustments by major customers.Subscribe to our daily newsletter