Samsung Electronics

Samsung quarterly profit falls for first time in two years as new iPhones snatch sales

PUBLISHED : Friday, 24 January, 2014, 3:07pm
UPDATED : Friday, 08 May, 2015, 12:49pm

Samsung Electronics posted its first decline in quarterly profit in two years, hit by a one-off special bonus as well as slowing smartphone sales as it braces for a year of tougher competition with rival Apple.

The world’s biggest smartphone maker kept its full-year investment plan conservative and warned it would be difficult to increase earnings in the first quarter as demand pulls back from the year-end holiday period.

October-December operating profit fell 6 per cent year on year to 8.3 trillion won (HK$60 billion) in line with a previous estimate, Samsung said in a statement on Friday.

The figure was brought down by an 800 billion won special employee bonus to commemorate 20 years since chairman Lee Kun-hee announced a management strategy that the company regards as the catalyst for its recent growth.

It said a stronger won also hit profit, knocking off about 700 billion won.“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,” the company said in a statement.

Samsung said this year’s capital expenditure, a barometer of broader technology industry demand for manufacturing tools such as chip equipment, will be similar to last year’s 23.8 trillion won.

Operating profit at its cash cow mobile division stood flat at 5.47 trillion won but slipped 18 per cent from July-September’s record 6.7 trillion won as new Apple iPhones drew away sales during the year-end holiday period.

Operating profit from display unit Samsung Display tumbled 90 per cent to 110 billion won as weaker-than-forecast sales of the Galaxy S4 left smartphone screens sitting in the inventory, while subdued sales of television sets also had an impact on TV screen shipments.