Samsung expects 35% drop in fourth-quarter operating profit
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The news: Samsung reported a likely 35% drop in fourth-quarter operating profit, far below analysts' expectations.
The numbers: The world's largest memory chip, smartphone and TV maker estimated its operating profit fell to 2.8 trillion won ($3.2 billion) in October-December from 4.31 trillion won a year earlier, as many of its businesses experienced weak consumer demand. LSEG SmartEstimate had expected a 3.7 trillion won profit.
The context: Samsung rival LG Electronics also flagged lower-than-expected fourth-quarter operating profit of 313 billion won on Monday, citing intensifying competition and higher marketing spend in the face of weakening consumer demand due to high inflation. While weaker than expected, Samsung's on-year profit drop is its smallest in five quarters, having reported a 31% dip in the Q3 2022. The Korean manufacturer is due to release detailed earnings on 31 January.
What they said: BNK Investment & Securities analyst Lee Min-hee told Reuters: "The only thing that has improved is memory chips, and that's because Chinese PC and mobile makers began restocking memory chips in fourth quarter after using up their own stocks for so long."
"Consumer demand is still not great, and unless interest rates are lowered and the economy stimulated, it may not improve much."
The sources: Samsung Media Release, Reuters
