Samsung profit plummets on weak smartphone sales
28 January 2016 | 0
Samsung isn’t expecting much better. It sees a difficult environment in 2016 characterized by slowing IT demand.
“It would be a challenge to maintain 2016 operating profit levels,” said Kim SangHyo, Samsung’s vice president of investor relations, in a conference call with analysts.
A weak macro economy around the world will hurt business in the first half, but things should get better in the second half, the company said.
Sales in Samsung’s key mobile division fell 10% in the quarter to 24 trillion won. That was the result of an earlier pile up of unsold phones at retailers, and the fact that Samsung sold fewer high-end phones and more that were lower priced.
Samsung doesn’t divulge the number of smartphones it sells, preferring to announce total sales of all phone types. That figure was 97 million last quarter, with smartphones accounting for around 85%.
For 2016, it expects the mobile business will see single-digit growth due to tepid demand for new smartphones and tablet PCs.
Samsung’s semiconductor and display panel operations – it’s second-biggest business area – was the only good performer last quarter. Sales rose 11% year-on-year to 19.7 trillion won thanks to healthy demand for Flash memory chips and continued demand for mobile and server DRAM.
But the display business suffered due to weak demand for LCD panels. Samsung hopes stronger demand for OLED panels will help results in future.
The high-profile consumer electronics business saw sales drop 3% to 13.8 trillion won, although profits jumped to 0.82 trillion won.
IDG News Service