Samsung's 4Q profit misses expectations

By Youkyung Lee, Associated Press | Posted - Jan. 7, 2016 at 6:30 p.m.


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SEOUL, South Korea (AP) — Samsung Electronics said Friday that its fourth-quarter profit rose 15 percent over a year earlier, a smaller-than-expected gain as the world's largest maker of smartphones and memory chips struggles to revive growth.

The South Korean company reported in its earnings preview that it recorded 6.1 trillion won ($5.1 billion) in operating profit for the October-December quarter, compared with 5.3 trillion won a year earlier.

Samsung was expected to report 6.6 trillion won in operating profit, according to financial data provider FactSet.

Sales stayed nearly flat at 53 trillion won ($44.3 billion), also slightly lower than expectations. It did not give net profit or other details, which will be announced at the end of this month.

The preliminary results showed that the company's annual operating profit likely posted a slight gain from 2014 after posting more than 30 percent fall in 2014 from 2013.

But analysts estimated that its annual net income dropped for a second time in three years in 2015 after hitting a peak in 2013, as explosive growth in its mobile business, which once accounted for two-thirds of its profit, came to a stunning halt.

Analysts have recently lowered their forecasts on Samsung's earnings for the final quarter of 2015, citing weak global demand for personal computers and smartphones that hurt its semiconductor business. Its memory chip and mobile processor business have helped partially outweigh its profit fall from sales of its own smartphones.

Yoo Jongwoo, an analyst at Korea Investment & Securities, said sluggish iPhone sales pushed down demand for memory chips and mobile processors at Samsung.

They said Samsung's consumer electronics division, which manufactures and sells television sets and home appliances, was likely its only division that showed a recovery during the quarter thanks to seasonally high demand and a fall in LCD panel prices that helped save costs.

Even though Samsung announced a massive shareholder return policy in November, its stock price fell nearly 7 percent since Dec. 30 to a three-month low.

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This version was corrected to state that Samsung's annual profit did not drop for the second time in three years.

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Youkyung Lee

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