Samsung Q4 2018 profit declines by 29 percent due to weak demand
The Korean conglomerate reported its earnings result for the previous quarter today. Samsung Q4 2018 profit has declined by 29 percent compared to the same period last year. The company says that it’s due to weak demand for its memory products and more headwinds for its mobile and display business.
Overall, the results are in line with the earnings guidance that Samsung released earlier this month. That’s almost always the case. Samsung’s overall revenue for the entire quarter did come a bit on the higher side than expected
Samsung Q4 2018 profit hit by multiple factors
Samsung declared 59.27 trillion won ($53.3 billion) in consolidated quarterly revenue for Q4 2018, download 10 percent from Q4 2017. It reported an operating profit of 10.8 trillion won ($9.7 billion), down 29 percent. Samsung made 243.77 trillion ($219 billion) in revenue for the entire year with 58.89 trillion won ($52.9 billion) in operating profit. It points out that this marked the second straight year of setting record financial results despite the challenges in the final quarter.
The company says that its fourth quarter earnings were affected by lower demand for memory chips. This particular division has long been a cash cow for the company and the slowdown in sales is certainly hitting the bottom line hard. Samsung’s display business also saw increased competition much like the mobile division which also saw prices falling in Q4. The consumer electronics division reported higher earnings on the back of strong premium TV sales.
Samsung is warning investors that things won’t look up any time soon. It expects demand for its memory products to remain weak in the first quarter. It also expects profitability for OLED panels to decline as premium smartphone sales contract and competition from LTPS LCD products rise.
Large scale capacity expansions in the industry will also limit its LCD earnings. However, Samsung does expect improved earnings from the mobile business in the first quarter due to the new product launches. Nevertheless, it expects overall annual earnings to decline in 2019, even while predicting that demand for memory chips and OLED panels will improve in the second half.