Samsung 2019 Profits Tumble 2020 Looking Brighter
Samsung who are days away from a major smartphone announcement have reported a horror 2019 with profits falling 34%.
While sales rose 1% heavy discounting in the TV and smartphone markets saw profits fall to ($6 billion) in the quarter that ended in December 2019.
The rise in sales to $50.5 billion for the quarter, beat expectations of a 4.4% decline.
Samsung’s shares closed down 3.2% in Seoul on Thursday.
On February 11 its tipped that the Korean Company could rebrand their smartphones to the S20 and S20+
Samsung said it still expects some weak sales for a while, particularly in memory chips, display panels and consumer electronics due to lower seasonal demand over the first quarter.
Overall, however, this year could bring some relief. Samsung says it’s anticipating a general pickup across its business in 2020, attributing the expected improvements to “increasing demand from data centre companies” for memory chips, as well as greater adoption of 5G smartphones.
The firm attributed its latest profit drop to poor demand for display panels and “the continued fall in memory chip prices,” a problem that has dogged its earnings for at least a year.
The conglomerate also posted an upswing for its mobile unit in the last quarter, “thanks to solid sales of flagship Galaxy smartphones” as well as changes to make its wider device line up more profitable, it said.
Samsung used to sell too many smartphone models, leaving customers confused, according to analysts at Counterpoint Research. They said last fall that the company simplified its line up in 2019, fixing that problem.
Last year, Samsung also “drastically increased its portfolio and slashed operating margin” by introducing a range of cheap smartphones they also took on Chinese brands with sub $2K 4K TV’s.
The cheap smartphone move was designed to stave off competition from Huawei, which has made no secret of its desire to overtake Samsung as the world’s biggest seller of smartphones, noted Mo Jia, a research analyst at Canalys.
“But the battle never came,” he wrote in a new report, pointing out that Huawei was placed on a US trade blacklist last May that stifled its overseas business.
Ultimately, Samsung managed to retain — and slightly extend — its lead in the global smartphone market in 2019, taking 21.8% share of all shipments followed by Huawei and Apple at 17.6% and 14.5% respectively, according to Canalys.
The global rollout of 5G has already provided a boost. Since hitting the market last year, Samsung’s 5G smartphones have proven to be so popular that Oppo the other 5G smartphone providers to Telstra is struggling to sell their model alongside the Samsung offering.
The company said earlier this month that their 5G Galaxy smartphone accounts for more than half the global market for 5G handsets.