Increasing global demand for smartphones as well as memory chips dealt a blow to Samsung Electronics as it reported Thursday a 40 percent on-year drop in fourth-quarter net profit. The company also hinted at a profit decline for the first half of this year citing, difficult business environments.
The world’s top smartphone developer continued to be squeezed at both last of the lucrative smartphone market with high-end competition from arch-rival Apple (LSE: 0R2V.L – news) liked by cheaper players like China’s Huawei and Xiaomi.
According to FactSet, a financial data provider, the result fell short of expectations, even after considering the negative impact from foreign exchange currency rates estimated at 400 billion won. Analysts expected 5.1 trillion won in net income.
Samsung’s net profit for the period of October-December plunged 40% from starting a year to 3.2 trillion won ($2.7 billion). Sales edged up 1% to 53.3 trillion won for the quarter, while operating income rose 16 percent to 6.1 trillion won, in line with its earnings preview starting this month.
At the period of the last quarter of 2015, the semiconductor business reported its first quarter-over-quarter benefit decrease in over one year. It logged 2.8 trillion won in working wage, around 25 percent lower than the past quarter however somewhat higher than a year prior. The cellular telephone business posted its second in a row quarterly benefit decrease with 2.2 trillion won in working wage. Despite the fact that Samsung extended offers of its top of the line cell phones, including the Galaxy Edge arrangement with bended presentations, purchasers rushed to less expensive cell phones, driving down its general benefit.
As Samsung’s reliance on the chip developer business grew, the firm in May began building a new $14.3 billion chip plant in Pyeongtaek, 65 kilometres (40 miles) south of Seoul.
This interest in the manufacturing plant, which is to start creation in 2017, is the biggest the firm has ever dedicated to a solitary plant.