Samsung forecasts steep drop in Q4 earnings

Samsung Electronics flag (L) and South Korean flags (C) flutter outside their headquarters in Seoul. (AFP PHOTO/JUNG YEON-JE)

Samsung Electronics flag (L) and South Korean flags (C) flutter outside their headquarters in Seoul. (AFP PHOTO/JUNG YEON-JE)

SEOUL: South Korea’s Samsung said on Tuesday it expected a steep drop in its operating profit for the fourth quarter of 2013, as slowing sales of high-end smartphones and a strong won hit the world’s top technology firm.

The company forecast an operating profit of 8.3 trillion won ($7.8 billion) for October-December, down 18.3 per cent from the third quarter and 6.1 per cent lower than a year earlier.

Sales will likely reach 59 trillion won, down 0.1 per cent from the third quarter but up 5.24 per cent from a year earlier, according to earnings guidance released by the firm. The company did not disclose net profit estimates.

It would mark the first drop in Samsung’s operating profit since the first quarter of 2013 and would be the lowest figure since July-September 2012, when it was 8.06 trillion won.

The figure also fell well below forecasts of 9.65 trillion won by analysts surveyed by Dow Jones Newswires.

Samsung — the world’s top maker of mobile phones and TVs — posted record profits for the first three quarters of last year, largely fuelled by robust sales of its popular smartphones.

The latest earnings guidance showed the firm’s annual sales and operating profit for 2013 hit record highs of 228.4 trillion won and 36.7 trillion won, respectively.

But the company — which dethroned US rival Apple as the world’s top smartphone maker — saw sales of high-end devices slow as the market becomes increasingly saturated.

Intensifying competition against budget handset makers raised questions over whether Samsung could sustain its ever-soaring profits.

Samsung produces a range of technology products from memory chips to TVs but its mobile division has fuelled the company’s stellar earnings in recent years.

Consumers showed relatively cool reaction to its much-heralded Galaxy Gear smartwatch launched last September.

The firm’s final results are due to be released later this month.

– AFP/fa

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