Samsung has seen its net profit plunge 40 per cent year-on-year in the 2015 fourth quarter, and has forecast challenges ahead in 2016.
Samsung posted net profit of 3.2 trillion won (around $3.8 billion) for the quarter, with revenue of 53.32 trillion won up 1 per cent year-on-year. Operating profit of 6.14 trillion won was up 16 per cent year-on-year.
Among Samsung’s business divisions, its IT & mobile communications sales fell 5 per cent year-on-year in the quarter to 25 trillion won.
Samsung stated that a slight quarter-on-quarter decrease in smartphone shipments due to a year-end inventory adjustment and an increased portion of the mid- to low-end products led to the decline in sales.
Quarterly shipments and sales of tablets, meanwhile, increased due to seasonal demand and steady sales of the Galaxy Tab A and Tab S2.
“In the first quarter, although slowing demand for smartphones and tablets is forecast due to seasonality, and in spite of slowing shipments of Samsung smartphones, an enhanced product mix with the introduction of new line-ups, such as the Galaxy A (2016) series, is expected to help stabilise sales and profitability,” Samsung stated.
In the smartphone and tablet categories, Samsung expects single-digit percentage growth in 2016 “amid softening demand and intensifying competition”.
“Despite this challenging environment, the company will focus on increasing smartphone shipments and maintaining a double digit margin through releases of competitive devices and an optimised product portfolio,” Samsung stated.
Samsung, meanwhile, stated the components side of its business “was impacted by weakened prices for DRAM chips and LCD panels due to overall softer demand in the IT market and PCs” in the fourth quarter.
Samsung’s device solutions business posted sales of 19.74 trillion won for the quarter, down on the previous quarter, but up 11.5 per cent year-on-year.
Samsung’s consumer electronics business posted sales of 13.85 trillion won for the quarter, up from the third quarter, but down 3 per cent year-on-year, with Samsung noting that “TV market demand increased significantly entering the year-end peak season”.
Samsung stated that, “expecting challenges in 2016 to maintain earnings due to a difficult business environment and slowing IT demand”, it “will strive to improve performance in the second half, by capitalising on strong seasonal demand for set business products and enhancing the product mix in components business”.
“Looking at the first quarter specifically, challenging business conditions will likely remain due to weak seasonal demand and a slowdown in the IT industry,” Samsung stated.
“Therefore, the components business will focus on expanding the proportion of value added products, while the set business will focus on major launches of its new products.”
