Operating profit should fall 28.7%. Sales of memories and smartphones have pulled the results down
DIGITAL Look writing
Although it has recorded a record of profits in the penultimate quarter of 2018, Samsung has issued a reported announcement that its revenues and profits for the last three months of last year will be lower compared to the same period of 2017.
According to the company, the sales forecast for the period is about US $52.5 billion, a drop of 11% over the previous 12 months. In addition, operating income should drop 28.7% compared to last year, totaling US $9.67 billion. The forecast caused shock in investors and market analysts, who expected US $11.72 billion operating profit and US $55.7 billion in revenue.
The results that should be presented in the next report of the South Korean manufacturer were affected by two factors, according to the same: “Weak demand in the memory sector” and “intensification of competition in the smartphone sector”. In the case of memories, shipments declined due to unforeseen inventory adjustments from data center sector customers. In addition, the company says it has spent more on smartphone marketing in the face of stable sales â € ‹ â € ‹ and strong seasonality. The results were also apparently affected by a “non-recurring expense”, which was not specified by the company.
As for the current quarter, Samsung expects profits to remain “moderated” because of the slow demand for memory. However, the company expects a more favorable scenario in the second half of 2019. The company is pointing to 5g and foldable devices â € ‹ â € ‹ to improve the performance of its mobile division. In addition, she claims that her OLED screens for smartphones will continue to increase market penetration.
Turbulent period for Giants
The Samsung announcement shows that the last quarter of 2018 was definitely not a period of the nicest for the giants of technology. In the last week, Apple also issued a letter to investors, announcing that the expectation of revenue for the period will be US $9 billion below the projected out.
The fact is that both companies are suffering from increased demand for smartphones, and although only Apple has highlighted China specifically as one of the leading causes for sales below the expected, Samsung has faced similarly an intense Market on the part of Huawei and Xiaomi. However, the difficulties with the memory business are unique to Samsung.
The official disclosure of Samsung’s results will occur at the end of January.
Source: CNBC
