Samsung’s Q4 profit is better than expected

Home > Business > Industry

print dictionary print

Samsung’s Q4 profit is better than expected


Samsung Electronics announced a better-than-expected profit for the final quarter of 2019, which signaled a rebound of chip prices from a cyclical downturn but fell short of turning 2019 results around.

In an earnings guidance released Wednesday, the tech giant projected an operating profit of 7.1 trillion won ($6 billion) for last year’s fourth quarter compared to a market consensus of 6.5 trillion won. That figure represented an 8.7 percent drop over the previous quarter and a 34.3 percent drop compared to a year earlier.

Fourth quarter revenue fell 4.8 percent to 59 trillion won compared to the previous quarter, which undershot analysts’ forecasts of 61 trillion won.

While it is customary for Samsung to not explain preliminary earnings announcements, analysts believe memory chips prices are rebounding.

“Demand for and prices of DRAM and NAND chips hit bottom in November and started recovering in December,” said Kim Sun-woo, an analyst at Meritz Securities.

Samsung did not break down performance by divisions - chips, phones, displays and consumer electronics - but analysts said semiconductors drove earnings in the quarter.

“We forecast that the semiconductor business posted 3.5 trillion won in operating profit and 16.9 trillion won in revenue,” said Kim Yang-jae, an analyst at KTB Investment & Securities. That would represent an 14.8 percent rise in operating profit from the previous quarter and a decrease in revenue of 3.9 percent.

He said displays may have brought in 200 billion won in operating profit, down 82.9 percent compared to the previous quarter, and 9 trillion won in revenue, down 2.8 percent. Display shipments became sluggish after the release of Apple’s OLED smartphone in the third quarter.

The IT and mobile communications sector that handles smartphones was expected to contribute 2.5 trillion won in profit and 24.2 trillion won in revenue, a slight improvement over a year ago thanks to sales of low-price phones. The consumer electronics division likely generated 13 trillion won in sales, up 18.9 percent compared to the third quarter, and 900 billion won in operating profit, up 66.7 percent.

Full-year results were underwhelming as the company faced an industry downturn and a global slowdown in trade throughout 2019.

After factoring in the fourth quarter, Samsung is expected to post an annual total operating profit of 27.2 trillion won for 2019, down 53 percent from 2018 and the lowest since 2015.

After that tough year, both Samsung and analysts predicted a better 2020.

The company announced Sunday it will unveil a new Galaxy S series phone on Feb. 11 in San Francisco. Media outlets reported a second foldable phone will debut at the event too.

Log in to Twitter or Facebook account to connect
with the Korea JoongAng Daily
help-image Social comment?
lock icon

To write comments, please log in to one of the accounts.

Standards Board Policy (0/250자)