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(LEAD) Samsung Q4 net tumbles on smartphone, chip woes

All News 09:24 January 28, 2016

(ATTN: RECASTS lead: ADDS details throughout; UPDATES share price)
By Kang Yoon-seung

SEOUL, Jan. 28 (Yonhap) -- Samsung Electronics Co. reported a sharp drop in fourth-quarter profit Thursday as its smartphone business stuttered on sluggish demand for premium models and chip prices remained weak.

Net profit reached 3.22 trillion won (US$2.68 billion) in the October-December period, down 39.7 percent from the 5.34 trillion won posted a year earlier, Samsung Electronics said in its regulatory filing.

Sales advanced 1.11 percent on-year to 53.3 trillion won in the October-December period while the operating profit moved up 16.15 percent over the cited period to 6.14 trillion won.

For all of 2015, Samsung's net profit shed 18.53 percent to 19 trillion won. Its operating profit came to 26.4 trillion won, up 5.55 percent from the previous year, but sales dropped 2.69 percent to 200.6 trillion won.

The final earnings result came in line with the guidance report released earlier this month, when Samsung estimated its fourth-quarter operating profit and sales to stand at 6.1 trillion won and 53 trillion won for the October-December period.

It marks the first time since the July-September period of 2014 for Samsung to post an on-quarter drop in operating profit.

Industry watchers said the weak earnings came as Samsung's chip business, which recouped Samsung's losses from its mobile business, lost steam and posted a weak on-year rise in the October-December period.

Samsung Electronics' semiconductor business, which recently emerged as the company's main source of revenue, posted an operating profit of 2.8 trillion won in the fourth quarter, a tad higher than the 2.7 trillion won posted a year earlier.

Samsung said the sluggish growth came as the demand for PC-related products continued to fall globally, although the shipment for mobile devices and servers managed to push up the sales.

The company's IT and mobile business, which is in charge of smartphones, posted an operating profit of 2.23 trillion won in the fourth quarter, slightly rising from last year's 1.96 trillion won.

But the performance continued to remain well below the operating profit of 6.43 trillion won posted in the first quarter of 2014.

Industry watchers have been citing the rising presence of Chinese rivals as one of the major drags on Samsung, while the increasing portion of budget models also ate into its profitability.

Samsung also did not enjoy foreign exchange gains in the fourth quarter, compared with the July-September period when the weakness of the local currency against the U.S. dollar gave Samsung an extra gain of 800 billion won.

Shares of Samsung Electronics fell 1.87 percent to 1,153,000 won as of 9:07 a.m., when the KOSPI fell 0.55 percent. The fourth-quarter result was released before the market opened Thursday.


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