Samsung Q4 2015 Profit Falls From Q3 as Sluggish Sales Continue

 
 
By Todd R. Weiss  |  Posted 2016-01-28 Print this article Print
 
 
 
 
 
 
 
Samsung, earnings, profit, revenue, Q4 2015, smartphones, chips

Like Apple and other tech companies, Samsung is still seeking ways of increasing revenue and profits in a tough global market.

Samsung's fourth-quarter 2015 revenue was up slightly, while its operating profit was down compared with the prior quarter as the global electronics company continues its pattern of sluggish sales over the last several quarters.

In a Jan. 28 announcement, Samsung reported an operating profit of $5.05 billion (6.14 trillion Korean Won) for the fourth quarter of 2015, which is down from the $6.4 billion the company posted in the third quarter. The company's Q4 2015 consolidated revenue was $44 billion (53.32 trillion KRW), which is up from the 51.68 trillion KRW reported in Q3. The fourth quarter ended on Dec. 31, 2015.

For the fourth quarter of 2014 ended Dec. 31, Samsung posted revenue of $48 billion, which is an increase of 11 percent from Q3, when the company posted $43.2 billion in sales. Net profit for Q4 was $4.8 billion, up 26.3 percent from the $3.8 billion that was posted in Q3, according to figures the company released on Jan. 29.

For the full year of 2015, Samsung reported total revenue of $166 billion (200.65 trillion KRW) and an operating profit of $22 billion (26.41 trillion KRW). That compares to total revenue of 206.21 trillion KRW for the full year of 2014 and a full year 2014 operating profit of 25.03 trillion KRW.

"Facing global economic headwinds, including a sharp fall in oil prices, the company's fourth quarter earnings fell quarter-over-quarter, as the components side of the business was impacted by weakened prices for DRAM chips and LCD panels due to overall softer demand in the IT market and PCs," the company said in a statement.

"Expecting challenges in 2016 to maintain earnings due to a difficult business environment and slowing IT demand, the company will strive to improve performance in the second half, by capitalizing on strong seasonal demand for set business products and enhancing the product mix in components business," Samsung stated.

Samsung said it will continue to look for ways to increase profitability in its existing business units while also focusing on expanding markets such as the Internet of things (IoT), particularly in the smart home and smart health market segments.

"Looking at the first quarter specifically, challenging business conditions will likely remain due to weak seasonal demand and a slowdown in the IT industry," the company stated.

The company is still working to increase its sales of its mobile devices in a very competitive global market.

"A slight quarter-over-quarter decrease in smartphone shipments due to a year-end inventory adjustment and an increased portion of the mid- to low-end products led to the decline in sales while a seasonal increase in marketing expenses slightly impacted profit," the company stated. "In the first quarter, although slowing demand for smartphones and tablets is forecast due to seasonality, and in spite of slowing shipments of Samsung smartphones, an enhanced product mix with the introduction of new line-ups, such as the Galaxy A (2016) series, is expected to help stabilize sales and profitability."

The outlook for the rest of 2016 likely includes "single-digit percentage growth in both the smartphone and tablet categories amid softening demand and intensifying competition," the company said. "Despite this challenging environment, the company will focus on increasing smartphone shipments and maintaining a double digit margin through releases of competitive devices and an optimized product portfolio."

Several IT analysts told eWEEK that the company's Q4 financial figures show that Samsung's difficult days are not yet behind it.

"Samsung is getting hit negatively from every direction," Patrick Moorhead, principal analyst at Moor Insights & Strategy, told eWEEK in an email reply. "On a component and silicon basis, a decline is PC sales is hurting storage, memory and displays and tablet and phone weakness is hurting storage and [system-on-a-chip integrated circuits]."

At the same time, "while the Samsung brand of smartphones is still the number one unit share leader, they continue to lose share at the premium space to Apple and the low end by local players like Xiaomi in China and Micromax in India," wrote Moorhead. "Samsung is in a real tough spot and I'd like to see a strong showing at this year's Mobile World Congress to see if they can launch a serious premium smartphone. Launching an awesome premium smartphone at MWC would be a really good step forward and that's something they can control, unlike the economy."



 
 
 
 
 
 
 
 
 
 
 
 
 

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