Samsung confirms 60 per cent fall in profit

Samsung is confident of a turnaround in the second half of 2019 after, as expected, it posted a 60 per cent drop in operating profit for the first quarter.

The company had warned investors earlier in the month that results would miss market expectations and has now confirmed profits fell to 6.2 trillion Won (£4.2bn) for the quarter, with revenue falling by 13.5 per cent to 52.4 trillion Won (£34tn).

The decline has been attributed to slowing smartphone sales, a fall in the price of memory chips and lower demand for displays panels.

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Samsung profits 

Samsung’s semiconductor unit saw operating profits fall by 64 per cent to 4.1 trillion Won, while the display division posted a loss of 560 billion won. Mobile profit fell by 40 per cent to 2.3 trillion won, with strong sales of the Samsung Galaxy S10 flagship offset by lacklustre shipments in the mid-range segments.

In addition to being the world’s largest mobile phone manufacturer, Samsung is a major supplier for its competitors – including great rival Apple - who rely on the company for components. This means it is particularly susceptible to a lack of growth in the market.

Such was Samsung’s concern about the situation, it took the unprecedented step of issuing a pre-guidance warning last month in order to communicate with shareholders as soon as possible.

However, it has now advised that it expects things to pick up in the second half of 2019, buoyed by a recovery in memory prices and increased demand from data centre operators. It also hopes that new devices in the Samsung Galaxy A and Galaxy Note range will aid smartphone sales.

5G is also an area for growth, with Samsung hoping that compatible handsets will drive sales of its own handsets and those from competitors powered by its components. The Korean giant is also eyeing a greater share of the networking market and has benefited from the arrival of 5G in its homeland.

It also said it saw foldable phones as an area for growth – both in terms of display and handset revenue. However, the Samsung Galaxy Fold – released to great fanfare in the leadup to Mobile World Congress (MWC) – has suffered from technical faults leading to launch delays.

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April 30, 2019 at 04:25PM
Steve McCaskill