SEOUL (dpa-AFX) - Samsung Electronics Co Ltd (SMSN.L, SSNNF.OB, SSNLF.OB) reported a profit for the fourth-quarter that decreased about 30.7 percent from last year, reflecting a drop in demand for memory chips used in data centers and smartphone. Quarterly operating profit also declined 28.7 percent from the previous year. Sales decreased about 10 percent from last year.
For 2019, the company expects overall annual earnings to decline due to weaker performance by the Memory Business. Demand for memory products and OLED panels is expected to pick up from the second half.
Samsung said it will unveil the Galaxy S10 next month at the Unpacked event in San Francisco and its new flagship model smartphones are expected to prop up sales and business performance in the coming months.
The reported that net income attributable to the shareholders of the parent company for the fourth quarter of 2018 dropped 30.68 percent to 8.33 trillion Korean won from 12.02 trillion won last year.
Quarterly operating profit declined 28.69 percent to 10.80 trillion won from 15.15 trillion won in the previous year.
Fourth quarter earnings were affected by a drop in demand for memory chips used in data centers and smartphones. The System LSI and Foundry businesses also saw profits decline due to weak seasonality.
Overall earnings at the Display Panel Business decreased slightly due to growing competition between mobile display makers.
Quarterly sales declined 10.18 percent to 59.27 trillion won from 65.98 trillion won the prior year.
In the IT & Mobile Communications (IM) Division, smartphone shipments and prices fell in the fourth quarter in a stagnant but highly competitive market, despite strong seasonal demand. However, the Networks Business reported gains on the back of 5G equipment installations and expansion of LTE networks.
Quarterly earnings increased in the Consumer Electronics (CE) Division, led by strong sales of premium TVs, such as QLED TVs.
Looking ahead, Samsung expects demand in the Memory Business to remain weak in the first quarter due to seasonality and macroeconomic uncertainties as well as inventory adjustments by major customers.
For OLED, profitability is likely to decline, weighed on by slow sales of premium smartphones and rising competition with LTPS LCD products. As for LCD, earnings are expected to decline as a result of large-scale capacity expansions in the industry.
Earnings in the IM Division are likely to improve in the first quarter, helped by the planned launch of the new flagship Galaxy smartphone and the introduction of commercial 5G telecom services in Korea. The CE Division will unveil new TV models and focus on premium home appliances, in order to prioritize profitability in a slower season.
The company plans to boost R&D activities, expand external technology collaboration and actively invest in strengthening core capabilities.
In the component business, Samsung will continue to improve its technology lead and offer new solutions to meet increasing demand for automotive and AI chipsets. The Company also aims to bring new innovation to OLED screens for smartphones and develop new applications.
Samsung said it is is offering new product innovations this year including foldable smartphones and MicroLED TVs. In AI, an enhanced Bixby will enable greater connectivity and build an AI-powered services platform to support more devices and applications. In 5G, Samsung is set to bolster its position in the market by providing solutions across network equipment, devices and chipsets.
The Semiconductor businesses posted 18.75 trillion won in consolidated revenue and 7.77 trillion won in operating profit in the fourth quarter.
The Display Panel Business reported 9.17 trillion won in consolidated revenue and 0.97 trillion won in operating profit in the fourth quarter.
Looking to the first quarter of 2019, sales of mobile displays are likely to be affected by unfavorable market conditions like intensifying competition and sluggish smartphone demand.
The IT & Mobile Communications Division (IM) posted 23.32 trillion won in consolidated revenue and 1.51 trillion won in operating profit for the fourth quarter of 2018.
Looking ahead to the first quarter, demand for smartphones and tablet PCs is projected to decline due to the seasonal slowdown in the market. Samsung will unveil the Galaxy S10 next month at the Unpacked event in San Francisco and its new flagship model smartphones are expected to prop up sales and business performance in the coming months.
For the whole of 2019, demand for smartphones is expected to maintain the same level seen in 2018 while market ASP is projected to rise due to a trend toward adopting high-end features such as large screens, higher memory capacity, and multi-cameras.
The Consumer Electronics Division, including the Visual Display and Digital Appliances businesses, recorded 11.79 trillion won in consolidated revenue and KRW 0.68 trillion in operating profit for the fourth quarter.
The TV market in the first quarter is forecast to slightly weaken under slow seasonal demand. Samsung will continue to strengthen its sales of QLED and super-large-screen TVs and release new QLED 8K TV to the global market in full scale.
Copyright RTT News/dpa-AFX