Samsung Says Q4 Profit Tumbled 69 Percent to Eight-Year Low Amid Weakening Global Economy

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Samsung Electronics flagged on Friday its quarterly revenue tumbled by two-thirds to an eight-year low as a weakening international economic system hammered reminiscence chip costs and curbed demand for digital gadgets.

The dismal revenue estimate by the world’s largest reminiscence chip, smartphone and TV maker – a bellwether for international client demand – units a weak tone for different know-how corporations’ quarterly outcomes.

Samsung’s income are anticipated to shrink once more within the present quarter, analysts mentioned, after the South Korean firm introduced its October-December working revenue seemingly fell 69 % to KRW 4.3 trillion received (roughly Rs. 27,980 crore) from KRW 13.87 trillion (roughly Rs. .90,190). a 12 months earlier.

It was Samsung’s smallest quarterly revenue for the reason that third quarter of 2014 and fell wanting a KRW 5.9 trillion (roughly Rs. 38,370 crore), in keeping with Refinitiv SmartEstimate, which is weighted towards forecasts from analysts who’re extra persistently correct.

“All of Samsung’s companies had a tough time, however chips and cell particularly,” mentioned Lee Min-hee, analyst at BNK Funding & Securities.

Quarterly income seemingly fell 9 % from the identical interval a 12 months earlier to 70 trillion, Samsung mentioned in a brief preliminary earnings assertion. Asia’s fourth-largest listed firm by market worth will launch detailed earnings on January 31.

Rising international rates of interest and price of dwelling have dampened demand for smartphones and different gadgets that Samsung makes and in addition for the semiconductors it provides to rivals equivalent to Apple.

“For the reminiscence enterprise, the decline in fourth-quarter demand was larger than anticipated as prospects adjusted inventories of their effort to additional tighten funds…,” Samsung mentioned within the assertion.

Its cell enterprise’ revenue declined within the fourth quarter as smartphone gross sales and income decreased attributable to weak demand ensuing from extended macroeconomic points, Samsung added.

“Reminiscence chip costs fell within the mid-20 % through the quarter, and high-end telephones equivalent to foldable did not promote as nicely,” mentioned BNK Funding’s Lee, including its show enterprise was harm attributable to consumer Apple’s manufacturing delays on the world’s largest iPhone manufacturing facility in China through the quarter.

Three analysts mentioned they anticipated Samsung’s income to dive once more within the present quarter, with a probable working loss for the chips enterprise as a glut drives an additional drop in reminiscence chip costs.

Samsung shares closed 1.4 % increased on Friday, versus a 1.1 % rise within the broader market. Shares of rival reminiscence chip maker SK Hynix rose 2.1 %.

“The explanation shares are rising regardless of the poor earnings result’s.. buyers are hoping Samsung might want to scale back manufacturing, like Micron or SK Hynix mentioned they’d, which might assist the reminiscence business total,” mentioned Eo Kyu-jin, an analyst at DB Monetary Funding.

Samsung had mentioned in October that it didn’t anticipate a lot change to its 2023 investments. Analysts mentioned that Samsung has a historical past of not saying reminiscence chip manufacturing cuts, however might organically regulate funding by delaying bringing in tools or in different methods.

© Thomson Reuters 2023

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