As earlier forseen, Samsung Electronics is the latest tech giant to struggle to take a bigger bite out of its key products in a consolidated fourth quarterly revenue.
The South-Korean tech giant today reported financial results ending December 31, 2018 and the fiscal year 2018. The Company posted KRW 59.27 trillion (R767.55 billion), down 10 percent from the previous year, and KRW 10.8 trillion (R139.86 billion) in quarterly operating profit, down 29 percent.
However, it’s not all doom and gloom as sales figures for the rest of 2018 have gone slightly up with a reported KRW 243.77 trillion (R3.156 trillion) in revenue and KRW 58.89 trillion (R762.63 billion) in operating profit. That’s a significant increase from the 2017 financial results, which clocked up KRW 53.65 trillion in operating profit.
While the company has enjoyed record profits in recent years despite a series of setbacks, including a significant market share lost late last year, the latest sales figures suffered largely due to increasingly fierce competition in the smartphone market. Take for an example Huawei and Xiaomi, which offer quality devices at lower prices, resulting in both considerably closing the gap with Apple and in some cases surpassing it.
Profits decline due to weak seasonality
Samsung blamed the fourth quarter earnings downturn to “the drop in demand for memory chips used in data centres and smartphones,” the global market leader in computer chips and smartphones said in a statement.
The System LSI and Foundry businesses also saw profits decline “due to weak seasonality,” and so did the overall earnings at the Display Panel business, as well as the IT & Mobile Communications (IM) division. “However, the Networks Business reported gains on the back of 5G equipment installations and expansion of LTE networks,” further read the statement.
The latest results are a far cry from third quarter earnings – ending in September – with recorded operating profit of 17.57 trillion won (about $15.5 billion). That’s a 21 percent jump from the year earlier.
Looking ahead, Samsung expects overall annual earnings for 2019 to decline due to weaker performance of some of its products. That said, earnings in the IM Division are likely to improve in the first quarter, helped by the planned launch of the new flagship Galaxy smartphone (Samsung Galaxy S10 & S10 Plus and the foldable Galaxy X).