First profit drop in three years for Samsung? | RetailDetail

First profit drop in three years for Samsung?

First profit drop in three years for Samsung?

Korean electronics giant Samsung has forecast a 10 % turnover drop and 35 % profit drop for its fourth quarter. This may result in its first full-year profit drop since 2011.

Better than its third quarter

Samsung has managed to limit the damage in its fourth quarter, after a considerable profit drop in its third quarter (-60 %). That is partly thanks to the weak Korean won currency compared to the American dollar and thanks to the moderate success of its Galaxy Note 4. Nevertheless, its numbers are not that positive: Samsung has forecast a 39.1 - 40.6 billion euro turnover, 10 % lower than what it managed in 2013's fourth quarter.

 

Profits have suffered even more as it dropped from 6.4 billion euro to 3.8 - 4.1 billion euro (-35 %). Its full-year numbers will be presented at the end of January, but it is highly likely that Samsung will have to concede its first profit drop in three years.

 

Mobile branch struggles

The explanation for the turnover and profit drop is clear: Samsung's smartphones and tablets face huge competition on both sides of the market. The newest iPhone is a threat in the higher echelons and on the lower end of the scale, cheaper brands like Xiaomi are gaining market share. In its third quarter alone, Samsung's mobile division had to deal with a 74 % profit drop. During its peak, the division represented 68 % of the group's profit, which has faded to 44 % in the third quarter.

 

Samsung hopes to turn the tide at its mobile division with 30 % fewer new smartphones and an increased focus on the development of its other divisions - like the "internet of things" and its television branch.

Questions or comments? Please feel free to contact the editors


Ceconomy sells its Russian division

21/06/2018

Ceconomy, MediaMarkt's parent company, has sold its onerous Russian division to local electronics chain M.video. The German electronics giant does not quit Russia altogether however, as it continues as shareholder of M.video.

LVMH's Bernard Arnault invests in refurbished phones

14/06/2018

BackMarket, a French start-up that wants to be a marketplace for refurbished smart phones, tablets and laptops, has secured a 41 million euro investment. The most famous new investor is Bernard Arnault, CEO of luxury group LVMH.

Coolblue closes hundreds of web shops

11/06/2018

Dutch e-commerce group Coolblue has terminated hundreds of its web shops, instead preferring one central web shop at coolblue.be/nl. This may be the precursor to an international expansion, the company says.

Xiaomi's European conquest goes through Paris

23/05/2018

Chinese smartphone manufacturer Xiaomi just opened a physical store in Paris, part of its ambitious European expansion plan. The brand is also dreaming of an American launch.

Fnac Darty and MediaMarkt Saturn enter purchase alliance

16/05/2018

French electronics retailer Fnac Darty has set up a purchase alliance with competitor MediaMarkt Saturn. Both companies will buy together when it comes to the European retail market.

Amazon looking to outbid Walmart in Flipkart deal

03/05/2018

The battle for dominance on the Indian e-commerce market seems to be stepping up a notch: Amazon may be looking to buy a majority stake in Flipkart, trying to better Walmart which already started negociations with the Indian online retailer.