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(2nd LD) Samsung beats Q4 earnings estimate, 2019 performance worst in 4 yrs on chip prices

All News 09:46 January 08, 2020

(ATTN: CHANGES headline; UPDATES with more info throughout)
By Kim Han-joo

SEOUL, Jan. 8 (Yonhap) -- Samsung Electronics Co. expected better fourth-quarter earnings Wednesday but suffered its worst performance in four years in 2019 due to a protracted slump in chip prices.

The world's No. 1 memory chipmaker estimated its fourth-quarter operating income at 7.1 trillion won (US$6.1 billion), down 34.26 percent from a year earlier, but the reading was well above the median market estimate of 6.5 trillion won, largely on the back of a slight recovery in chip prices and better-than-expected market response for its smartphones.

The Korean tech giant expected its fourth-quarter sales at 59 trillion won in the three-month period, down 0.5 percent on-year. The fourth-quarter sales estimate stood at 60.5 trillion won on average.

(2nd LD) Samsung beats Q4 earnings estimate, 2019 performance worst in 4 yrs on chip prices - 1

For all of 2019, Samsung predicted its operating profit at 27.71 trillion won, marking a 52.9 percent on-year drop and the lowest since 2015 when the comparable figure was 26.4 trillion won.

Full-year sales are expected to reach 229.52 trillion won, a 5.9 percent fall from 2018, the tech giant said.

Samsung, also the world's largest smartphone market, has posted sluggish earnings since 2018 due to a supply glut of chip products, following a two-year memory chip boom.

Market watchers said a supply glut of DRAM and NAND flash chips, which account for more than two-thirds of the firm's sales, dragged down its profitability last year.

However, they voiced optimism for an improvement down the road, saying prices have shown signs of recovery, as chip manufacturers move to ease the supply gut amid the eased trade tensions between the United States and China.

The Hana Institute of Finance said in its recent report that the fluctuations and downturn in the semiconductor sector were largely due to oversupply and that price drops have recently eased.

"Exports and corporate earnings will still remain weak due to a base effect, but the recovery will start in the second quarter," the report said.

Samsung Electronics did not break down performances of its respective business divisions, saying it will announce the detailed earnings later this month.

Shares of Samsung Electronics were trading hands at 56,000 won, up 0.36 percent from a session earlier, on the Seoul bourse. The earnings guidance was announced before the local stock market opened.


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