Samsung saw a drop in profits on a quarterly basis, and sees some tough times ahead with DRAM and LCD panels both under pressure from weaker prices. Over the year, profit was up 5.5% to $22 billion and turnover was $166 billion (See Finance Results for more details).
Samsung’s LCD panels segment saw its earnings fall QoQ in Q4, due to a decrease in shipments of large-size panels and a continued decline in ASPs. The OLED panel market was influenced by positive factors, such as increased shipments and line utilisation; however, it was hampered by a decline in ASPs due to an expansion in the proportion of low- to mid-end panel sales.
In Q1’16, Samsung expects the LCD market to be affected by rising competition among panel makers, and declining seasonal demand. In response, the firm says that it will focus on improving cost efficiency and inventory management. As for OLED panels, Samsung expects a slowdown in the smartphone display market in Q1; due to this, the focus will be on reinforcing cost competitiveness and responding to market demand for new product releases by key customers. Samsung expects smartphone momentum to slow YoY in 2016, with most growth stemming from the low end.
Q4’15 brought a slight QoQ decrease in Samsung’s smartphone shipments, due to a year-end inventory adjustment and growth of low- to mid-end products. Samsung forecasts stabilised sales and profitability in Q1, due to an enhanced product mix.
A seasonal increase in marketing costs had a small impact on profits. Tablet shipments and sales rose slightly QoQ, due to seasonal demand and steady sales of the Galaxy Tab A and Tab S2.
Through 2016, single-digit percentage growth is expected in both the tablet and smartphone categories, with softening demand and rising competition. However, Samsung will focus on maintaining a double-digit smartphone margin with the release of competitive devices, in both the premium and mass market segments.
In TVs, demand for Samsung sets rose significantly in Q4. Earnings for the Visual Display business rose significantly, led by promotional sales and increased sales of premium products, such as SUHD TVs.
Samsung will focus on profitability in the TV market this year, expanding its SUHD line-up and sales of premium products, such as curved and large-sized sets.
