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Samsung likely to see earnings drop for 2 straight years

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Published : 2015-01-21 10:18
Updated : 2015-01-21 10:18

Samsung Electronics Co., the world's top smartphone maker, is forecast to post a profit slide for the second consecutive year in 2015 as the company strives to keep grip amid a slump in handset sales.


The South Korean tech powerhouse is expected to log a combined 20.8 trillion won ($1.91 billion) in net profit this year, down 6 percent from the 22.1 trillion won estimated for all of 2014, according to data compiled by market tracker FnGuide Inc., based on a median forecast from local brokerages.


The 2014 estimate marks a 27.3 percent fall from a year earlier if the figures match. Samsung Electronics is due to release its final version of last year's earnings later this month. The company did not reveal the estimate for net profit in its fourth-quarter earnings preview announced in early January.


Samsung's operating income is estimated to have dipped 32.2 percent on-year to 24.9 trillion won in 2014 and is predicted to further drop by around 6 percent this year.


Its cumulative revenue for 2014 is estimated at 205.4 trillion won, down 10.15 percent on-year, which will represent the first annual drop in nine years, the data showed.


Analysts cited sluggish sales of flagship Galaxy smartphone as a main reason for the dim outlook. Samsung Electronics has been losing share in the global handset market, squeezed by Chinese startups including now the world's No. 3 Xiaomi Inc. that came with cheaper phones, and its arch rival Apple Inc., which pushed ahead with the iPhone 6 in the high-end market.


Analysts said better performance in memory chips could offset the retreat in its mobile business for this year, although few were split in views over the outlook that the best days are probably behind Samsung's smartphone reign.


"The record-high earnings in 2013 were possible because Samsung was ahead of everyone else in the competition," said Roh Keun-chang, an analyst at HMC Investment & Securities Co. He forecast a 32 percent on-year profit decline for its mobile business division this year.


Hwang Min-sung, an analyst at Samsung Securities Co. expected improved performance at its chip business division will help the tech firm prop up, although a visible turnaround won't come until the second half. (Yonhap)