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THE INVESTOR
October 21, 2019
Big Reunion

Samsung

Samsung’s Q4 operating profit declines on slowing sales of chips, smartphones

  • PUBLISHED :January 31, 2019 - 14:56
  • UPDATED :January 31, 2019 - 14:56
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[THE INVESTOR] Tech giant Samsung Electronics saw its sales and operating profit fall in the October-December period, due mainly to a slowdown in demand for memory chips and smartphones.

In 2018, however, the company logged a record 243.77 trillion won (US$219.66 billion) in revenue and 58.89 trillion won operating profit.

Announcing its fourth-quarter earnings on Jan. 31, the company said its operating profit dropped 29 percent on-year to 10.8 trillion won with sales standing at 59.27 trillion won, down 10 percent.

It attributed the profit drop in the last quarter to sluggish demand for memory chips for data centers and smartphones.




“Although the last three months of the year are usually a peak season, the overall downturn in the global smartphone segment and competitive market conditions brought down profits of the smartphone unit,” Samsung said in a press release.

Broken down, the semiconductor business, usually accounting for more than 70 percent of its entire profits, posted 7.77 trillion won in operating income, down from 10.9 trillion won a year ago. The chip business unit’s sales stood at 18.75 trillion won, down from 21.11 trillion won.

The display business unit, which rolls out OLED display panels for smartphones, posted an operating profit of 970 billion won, declining from 1.41 trillion won a year ago, while its sales came in at 9.17 trillion won, down from 11.18 trillion won.

The mobile business unit saw its operating income drop from 2.42 trillion won in the last quarter of 2017 to 1.51 trillion won in the fourth quarter this year. It earned 23.32 trillion won in sales, lower than 25.47 trillion won a year ago.

The consumer electronics unit, in charge of selling home appliances like TVs, fridges and washers, is the only business that saw the operating income increase on-year. It posted 680 billion won in operating profit in the fourth quarter, up from 550 billion won. Its sales, however, declined from 12.57 trillion won to 11.79 trillion won during the same period.

Samsung vowed to make all-out efforts to boost its profits across business units by rolling out differentiated products.

“Under our commitment to achieving sustainable growth over the mid- and long-term, Samsung will focus on enhancing its existing leadership and developing new growth areas,” the company said, adding it will offer new product innovations this year including foldable smartphones and MicroLED TVs.

In a conference call following the earnings announcement, the tech giant said it sold 78 million smartphone units and 7 million table PCs in the fourth quarter.

Regarding the ongoing memory chip market slowdown, the firm said it would not make investments to add new manufacturing lines due to market uncertainties now.

By Kim Young-won (wone0102@heraldcorp.com)

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