Samsung Electronics has reported a 35 per cent decline in its fourth-quarter operating profit, a figure much worse than analysts had anticipated. The world’s leading memory chip, smartphone, and TV manufacturer estimated its operating profit to be 2.8 trillion won (USD 2.13 billion) for October-December, down from 4.31 trillion won in the same period the previous year.
Lower-than-expected profits from Samsung’s chip contract manufacturing, mobile processors, television and home appliances are believed to be the primary factors contributing to the company falling short of forecasts, according to industry analysts.
Rival LG Electronics also faced challenges, reporting a fourth-quarter operating profit of 313 billion won, below market estimates, due to escalating competition and increased spending on marketing in the television and home appliance sectors.
Despite the overall decline, there is a silver lining for Samsung as its chip division managed to reduce losses in the fourth quarter. Memory chip earnings improved, especially in the Dynamic Random-Access Memory (DRAM) business, which returned to profitability. The memory chip sector, which experienced a severe downturn last year, is expected to rebound this year as prices increased in the December quarter after production cuts, with this trend anticipated to continue.
However, Samsung’s mobile business encountered challenges, with analysts suggesting a likely decrease in shipments of its flagship foldable models, leading to a slight dip in earnings. Weak consumer demand persists in various sectors, prompting concerns among analysts who believe that improvements may be limited unless interest rates are lowered and economic stimulation occurs.
(Inputs from Reuters)
