Samsung profits halved in 2019

January 30, 2020

Samsung Electronics saw its annual profit drop 53% to 27.8 trillion won in 2019, the company said in its fiscal report. Revenue also dropped 5.4% from a year prior to 230 trillion won.

For the fourth quarter, the company reported operating profits of 7.16 trillion won, down by over a third compared to a year ago, and revenue of 59.9 trillion won, which is up 1%.

For 2020, Samsung said it expects improvements in its overall business performance but that it would also see continued uncertainty in the global business environment.

In the fourth quarter, the continued fall in memory chip prices and weakness in display panels were the main causes of the profit drop, the company said. Solid sales of flagship smartphones and improving memory demand, however, “helped ease the decline in overall earnings”, it added.

Its semiconductor business continued to be the biggest contributor to profits, with operating profits of 3.45 trillion won in the fourth quarter. The company expects inventory to return to levels prior to the decline sometime in the first half of 2020.

Samsung’s mobile business contributed 2.52 trillion won, a significant increase from 1.51 trillion won from a year prior. Effective use of marketing expenses for the holiday season allowed the profitability of major smartphones such as the Galaxy A series to hold steady, the company said.

Market competition in the mobile space will intensify in 2020 but the company said it would respond by expanding 5G adoption and launching new foldable products.

Its display panel business reported an operating profit of 220 billion won due to weak demand of OLED but this is forecast to grow in 2020 with the wider adoption of 5G phones.

The consumer electronics business saw operating profits of 810 billion won, its best quarterly performance of the year. Sales for QLED TVs doubled from a year ago thanks to strong sales in the holiday season. There are geopolitcal risks in 2020 but large sporting events like the Olympic Games will increase demand.