Samsung’s fourth quarter global revenue and profit figures were both down in comparison to the same quarter last year. For 2019, the company expects overall annual earnings to decline
Samsung Electronics reported financial results for the fourth quarter ended 31 December 2018, and the fiscal year 2018. The company posted KRW 59.27 trillion (South Korea Currency) in consolidated quarterly revenue, down 10 percent from a year earlier, and KRW 10.8 trillion in quarterly operating profit, down 29 percent.
For 2018, Samsung reported KRW 243.77 trillion in revenue and KRW 58.89 trillion in operating profit. An official statment released by the brand said that the earnings in fourth quarter were affected by a drop in demand for memory chips used in data centers and smartphones. It also said that earnings from the display panel business decreased due to growing competition between mobile display makers.
IT and mobile communications division
In the IT and mobile communications division, smartphone shipments and prices fell in the fourth quarter in a stagnant but highly competitive market, despite strong seasonal demand. However, the networks business reported gains on the back of 5G equipment installations and expansion of LTE networks.
Quarterly earnings increased in the consumer electronics division, led by strong sales of premium TVs, such as QLED TVs.
Looking ahead, Samsung expects demand in the Memory Business to remain weak in the first quarter due to seasonality and macroeconomic uncertainties as well as inventory adjustments by major customers. For OLED, profitability is likely to decline, weighed on by slow sales of premium smartphones and rising competition with LTPS LCD products. As for LCD, earnings are expected to decline as a result of large-scale capacity expansions in the industry.
Earnings in the IM Division are likely to improve in the first quarter, helped by the planned launch of the new flagship Galaxy smartphone and the introduction of commercial 5G telecom services in Korea. The CE Division will unveil new TV models and focus on premium home appliances, in order to prioritize profitability in a slower season.
For 2019, the Company expects overall annual earnings to decline due to weaker performance by the Memory Business. Demand for memory products and OLED panels is expected to pick up from the second half.
Samsung consumer electronics to focus on Premium Products
Samsung’s consumer electronics division, including the visual display and digital appliances businesses, recorded KRW 11.79 trillion in consolidated revenue and KRW 0.68 trillion in operating profit for the fourth quarter.
The brand claims that the global TV market grew by double-digits QoQ thanks to the year-end peak season, but slower demand in emerging markets limited growth YoY.
Earnings from the visual display business improved both QoQ and YoY thanks to increased sales of QLED and ultra-large-sized TVs backed by successful year-end promotions and product mix improvement. In particular, sales of QLED TVs nearly tripled YoY, with QLED 8K TV and super-large-screen TVs of 75 inches and above solidifying leadership in the premium TV market.
The TV market in the first quarter is forecast to slightly weaken under slow seasonal demand. Samsung said that it will continue to strengthen its sales of QLED and super-large-screen TVs and release new QLED 8K TV to the global market in full scale.
The TV market in 2019 is projected to be similar to last year despite negative factors including a lack of global sports events and economic slowdowns in emerging markets. The Company will aim to secure profitability and growth by expanding the premium lineup including QLED 8K TVs, super-large-screen TVs, and MicroLED products.