Samsung Profit Lowest in Three Years

As forecast, Samsung reported its weakest quarterly operating profit for three years, following a steep decline in earnings from its IT and mobile divisions. Operating profit of KRW4.1 trillion ($3.8 billion) was 60% lower than Q3 of last year and this was the fourth consecutive quarter of declines. Turnover for the quarter was also lower than expected at KRW47.4 trillion ($44.8 billion), which is 9.3% down from the previous quarter and 19.6% down from a year ago. Net profit in Q3 almost halved year on year to KRW4.2 trillion ($3.9 billion), from KRW8.2 trillion ($7.7 billion) a year earlier.

Samsung’s mobile unit contributes the most to both the IT business and the group’s total turnover and in Q3 sales of KRW23.5 trillion ($22.2 billion) were down 34% YoY. Sales in Samsung’s display panel business also declined, contributing KRW6.2 trillion ($5.8 billion) to total turnover, which was 22.7% lower than Q3 of last year.

As a result of its poor third quarter performance, Samsung said that it would pursue a new strategy aimed at the mid- to low-end smartphone market, targeting stronger growth in the emerging Asian markets, rather than the saturated premium sector. Samsung’s sales of high-end smartphones were weak in Q3 as the company faced strong competition from the new Apple iPhone 6 and 6 Plus handsets which were released in September (Display Monitor Vol 21 No 38).

Samsung issued an optimistic outlook for the fourth quarter, partly driven by continued growth in its semiconductor unit but also as demand for smartphones, tablets and TVs increases in the run-up to the end of year holiday period.