EXCLUSIVE: Samsung Revenues Fall, Facing Potential ACCC $16.2M Penalty
Samsung Electronics Australia has reported a $47M drop in revenue during 2020 profits for the COVID-19 year came in at $39.68M up on the prior year.
It’s also been revealed that the business is facing Federal Court Court proceedings for false, deceptive & misleading conduct following an investigation by the Australian Competition & Consumer Commission.
A provision of $16.27M was provisionally set aside by the Company in the event that they were unable to defend the case successfully.
In 2020 the business diversified into value TV’s and smartphones while expanding into selling a multitude of their products at Aldi.
Revenues for 2020 came in at $2.7 Billion Vs $2.8 Billion in 2019.During the same period key retail partners of Samsung Australia including JB Hi Fi, Harvey Norman and The Good Guys reported record growth spanning TV’s appliances and smartphones.
Samsung Australia who does not like to talk about category numbers has not said which divisions under performed in 2020.
Recent research suggests that the Companies mobile division that diversified into value smartphones in 2019 and 2020 saw a 25% fall in revenues despite the business holding a major share of the premium smartphone market in Australia.
In the TV market Samsung came under pressure from both LG and Hisense in both the premium and value markets.
In the opinion of the directors there were no significant changes in the state of affairs of the company that occurred during the financial year.
Executives said that Samsung Australia expects the negative impact of COVID-19 on global economic and market conditions to continue and that the duration and extent of the further spread of COVID-19 remain uncertain at this time.
They claimed that the full impact on results of operations remains unknown with observers predicting that major Australian Cities could be in lock down until the end of the year or October 24th, 2021, when Australia is expected to have 70% of the population vaccinated.
Last year Samsung cut marketing expenditure from $188M in 2019 to $166M in 2020.
Refund liability rose from $7.1M to $8.03M
The financials lodged with the Australian Securities & Investment Commission also revealed that On 4 July 2019, the ACCC filed court proceedings against Samsung Australia alleging that they made false, misleading and deceptive representations in advertising products in breach of the Australian Consumer Law.
SEA management estimated the potential penalty based on Australian Commercial Law Regime and reference to similar legal cases to be potentially $16.2M.
The Company said that the accrual of $16.27m reflects an estimated potential penalty that might be imposed by a court in the event that the company was unable to defend the ACCC’s case in full.