Samsung Electronics reported a significant drop in fourth-quarter operating profit, falling by an estimated 35%, which was worse than analysts had anticipated.
- The company’s preliminary results indicated that operating profit for October-December fell to 2.8 trillion won ($2.13 billion) compared to 4.31 trillion won in the same period the previous year.
- The weaker-than-expected profit can be attributed to persistent weak consumer demand across several of Samsung’s businesses, despite improvements in memory chip prices.
- Analysts suggest that lower-than-expected profit from chip contract manufacturing, mobile processors, television, and home appliance businesses may have contributed to Samsung falling short of forecasts.
- LG Electronics, Samsung’s rival, also announced lower-than-expected fourth-quarter operating profit, due to intensifying competition and increased spending on marketing in the television and home appliance markets.
- Samsung’s mobile business is likely to have experienced a decline in shipments of its flagship foldable models, leading to a slight dip in earnings.
- While Samsung’s profit drop is significant, it is the smallest year-on-year decline in five quarters. The company faced a severe industry downturn last year due to slow demand for gadgets and a memory chip glut.