Samsung Electronics flags 60% slump in Q1 operating profit

phys.org | 1/31/2019 | Staff
townskey13 (Posted by) Level 3
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The world's biggest smartphone and memory chip maker Samsung Electronics warned Friday of a more than 60 percent plunge in first-quarter operating profits in the face of weakening markets.

Operating profits for January to March would be "approximately 6.2 trillion won", the firm said in a statement, down 60.4 percent on-year.

Sales - Won - Percent - Drop

Sales were about 52 trillion won, it said, marking a 14 percent drop.

The firm is the flagship subsidiary of the giant Samsung Group, by far the biggest of the family-controlled conglomerates that dominate business in the world's 11th-largest economy, and it is crucial to South Korea's economic health.

Record - Profits - Years - Series - Setbacks

It has enjoyed record profits in recent years despite a series of setbacks, including a humiliating recall and the jailing of its de facto chief.

But now the picture has changed, with chip prices falling as global supply increases and demand weakens.

Samsung - Electronics - Investors - Week - Profits

Samsung Electronics warned investors last week to expect weak operating profits, citing "unfavourable market conditions" for displays and memory chips.

"Amid weak demand for memory business, a drop in price for signature products is expected," it said then.

Company - Cost - Competitiveness - Resource - Management

"The company will seek to improve cost competitiveness through effective resource management," it added, "while enhancing product quality in the short term".

Samsung was also launching the 5G version of its top-end Galaxy S10 smartphone Friday, after South Korea this week won the global race to commercially launch the world's first nationwide 5G networks.

Company - Competition - Smartphone - Market - Rivals

But the company has to contend with increasingly tough competition in the smartphone market from Chinese rivals such as Huawei—which in 2017 surpassed Apple to take second place—offering quality devices at lower prices.

Samsung supplies components to other manufacturers such as Apple as well as making its own devices.

Market - Prices - Crystal - Displays - Quarter-on-quarter

But market prices for liquid crystal displays have fallen 10 percent quarter-on-quarter, said Sanjeev Rana, an analyst at investment firm CLSA, while demand for smartphones in China—the world's biggest...
(Excerpt) Read more at: phys.org
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