Samsung profits decline 18%

Smart Hospitality transforming South Africa's hospitality industry
Smart Hospitality transforming South Africa's hospitality industry. (Image source: File)

Samsung Electronics Co., Ltd. on Friday announced revenues of $6.1 billion on a consolidated basis for the fourth quarter ended December 31, 2013, which is an increase of 0.3 percent quarter-on-quarter.

Samsung Electronics' profits declined 18% for the quarter (Image source: File)
Samsung Electronics’ profits declined 18% for the quarter (Image source: File)

For the quarter, the company posted consolidated operating profits of $7.8 billion, representing an 18-percent decline Q-o-Q. Consolidated net profit for the quarter was $7.51 billion.

In its earnings guidance disclosed on January 7, Samsung estimated fourth quarter consolidated revenues would reach approximately $5.4 billion with consolidated operating profit of approximately $7.8 billion.

The fourth quarter results brought Samsung’s full year 2013 revenue to an all-time high of R2.3 billion, up 14 percent from the previous year. Year-end net income registered $31.3854 billion and Samsung $37.8 106 billion in operating profit, a 27-percent on-year increase.

In 2013, Samsung maintained its market leadership in mobile devices as evidenced by its smartphone market shares of over 30-percent, for both developed and emerging markets and a two-fold surge in tablet sales from the previous year due to the release of new products such as GALAXY Tab3 and GALAXY Note 10.1 (2014 Edition). The solid performance is also the result of our efforts to strengthen customer touch-points with shop-in-shop experiences.

As for TV shipments, Samsung saw robust growth in developed markets in the quarter thanks to premium products that boosted growth by 90 percent from the July-September quarter. Orders for 60-inch and larger TVs recorded 80-percent growth while demand for Smart TVs grew by more than 60 percent in the fourth quarter.

Profit margins for Digital Appliances Business remained steady in the quarter led by increased sales of premium products in developed markets.

On the components’ side, inventory adjustments and a retreat in panel price took their toll on the Display Panel segment’s overall earnings but increased shipments of IT and UHD TV panels were a silver lining.

For the Memory business, revenue in the fourth quarter landed in positive territory with cutting-edge process and high-margin DRAM and NAND Flash memory chip products.

“Amid macroeconomic uncertainties such as a strong Korean won and increased concerns over possible quantitative easing (QE) tapering in the U.S., our earnings were lower than what the market expected due to a negative currency impact and a significant one-off expense of about 800 billion R8 207 million, however, fourth quarter operational results were respectably strong. Looking at the quarterly earnings trend, we expect 2014 to follow last year’s pattern of a weak first half and a strong second half as usual,” said Robert Yi, Senior Vice President and Head of Investor Relations.

For the first quarter, it will be challenging for Samsung to improve its earnings in the first quarter as the weak seasonality of the IT industry will put pressure on demand for components and TV products.

Looking into this year, in finished products, Samsung is looking to maintain its leadership in the smartphone business by leveraging its expanded product portfolio across diverse regional markets and price points.

Samsung is looking to increase its business footprint in the wearable device category with innovative products such as GALAXY Gear and it will ramp up its tablet lineup with mid- to low-end models and larger screens.

Staff writer