Smallest profit since 2011 for Samsung

Smallest profit since 2011 for Samsung

Samsung has released its 2013 fourth quarter numbers. The operational profit dropped 18 %, compared to the previous (record-breaking) quarter, to 5.6 billion euro.

 

"Weakest smartphone profit growth"

Profit dropped some 6 % lower than last year’s profit numbers and is a first in 2 years’ time that the operational profit actually dropped. “Even taking into account one-off costs, the profit is lower than expected. Samsung has not provided details, but smartphone profit may have fared worse than expected, given increased marketing expenses”, Lee Seung-woo (an IBK Investment & Securities analyst) told Reuters.

Two thirds of Samsung’s profit comes from mobile, a sector which brought in 3.6 billion euro in profits. That means it remained level with last year, even though the profit margins have dropped.

Profit has apparently also suffered from one-time bonuses because of the 20th anniversary of CEO Lee Kun-hee’s ‘New Management’ strategy. Apparently, these bonuses cost somewhere between 200 to 470 million euro. 

Strong won and fierce competition

Aside from the reasons mentioned above, the strong South Korean won and the emergence of several competitors (like Apple) have also impacted Samsung’s profit. Apple has started to sell its phones in China, pressuring Samsung’s profits even more. Samsung has already been present in the Chinese market for 7 years.

Other Samsung divisions, like its processor branch and television branch, had decreased profits when compared to the previous quarter. Processors managed to increase the turnover, with a 40 % profit growth compared to the year before. Televisions were just not that much in demand anymore.

 

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