Samsung released its earnings report for Q4 of the fiscal 2014. The Korean giant posted operating profit of 5.29 trillion won ( about $4.87 billion) from revenue of 52.73 trillion won ($48.6 billion).
The results show a decline from the same period a year ago by over a third. Samsung posted operating profit of 8.3 trillion won last year from 59.28 billion won of revenue. The company’s net income has now declined on an annual basis for four straight quarters.
Samsung’s mobile division posted 26.29 trillion won of revenue and 1.96 trillion won of profit for the quarter thanks to strong sales of Samsung Galaxy Note 4. The profit is down by more than 60% from 5.47 trillion won ($5.09 billion) a year ago.
The company expects its mobile business to grow throughout 2015 in emerging markets such as India and China. Expansion of 4G LTE services globally will also help its cause.
Samsung will also focus on “new materials, innovative design and differentiated features” in order to make its future devices stand out from the crowd. The newly launched Galaxy A series of smartphones will drive the company’s performance over the next quarter until the launch of Samsung Galaxy S6.
On the tablet side of the business, Samsung will focus on both premium and affordable devices. The company will continue to push forward in the market for wearables as well.
The manufacturer’s processor and RAM businesses unsurprisingly did well during the quarter. Considering Samsung’s plans to utilize its own silicon in future products, expectations point at a strong year ahead for the units.
Samsung has announced its earnings guidance for the fourth quarter of 2014, revealing an operating profit of 5.2 trillion won ($4.7 billion), down approximately 37% from the year ago quarter, but still better than the 4.06 trillion-won figure it reported in Q3 2014, as well as analysts’ expectations of 4.9 trillion won.
While the South Korean company’s smartphone business continued to struggle, analysts said that increase in profit compared to Q3 2014 is largely due to improvements in its semiconductor division.
Samsung expects sales to be around 52 trillion won in the quarter, down 12.3% year-on-year. The company will release complete financial results later this month.
Things are not happy and beautiful any longer for Samsung, the world’s number one smartphones manufacturer. As reported by Bloomberg, the Korean giant has posted its slowest growth since 2011.
Who’s to blame for the slow growth pace? For one, there is Lenovo, Huawei and other makers of cheap smartphones who’ve been flooding the markets in many areas, especially in Asia, a strong ground for Samsung. Apple is also partly responsible from Samsung’s decline as the fruity company has been luring high-end customers away from the Galaxy line maker…
The news will probably feel like a bucket of cold water thrown on the Korean company which has been riding high on its status of number one for a while. Sometimes, being number one doesn’t really matter if you can’t keep these profit margins high, and that’s exactly what Samsung is realizing right now.
According to Bloomberg:
Fourth-quarter operating income at Samsung’s mobile unit, the company’s biggest profit driver, was 5.47 trillion won, little changed from a year earlier and down from a record 6.7 trillion-won profit in the quarter ended Sept. 30, the company said.
The company said it “planned to lower its mobile marketing spend this year relative to revenue, after big promotional spending hit fourth-quarter profit,” reports Reuters. Maybe it’s a not a bad thing?
On the other side, Apple is expected to have shipped a record 55 million iPhones during last quarter. We’ll get confirmation next week as the company will report its Q1 financials.