Samsung said revenues for its fourth quarter slipped to KRW 59.88 trillion from 59.27 trillion, with the operating profit decreasing to KRW 7.16 trillion from 10.80 trillion. For the full year revenues went to KRW 230.40 trillion from 243.77 trillion and the operating profit to KRW 27.77 trillion from 58.89 trillion. Capex amounted to KRW 26.9 trillion, including KRW 22.6 trillion spent on semiconductors and KRW 2.2 trillion on displays.
The company explained that profit in the quarter weakened on the back of continued declines at memory chip prices and weakness in display panels. These declines were somewhat mitigated by improving demand for memory used in servers and mobile products, as well as solid sales for the company’s flagship smartphones. Looking ahead, the company expects overall improvements but for global uncertainties to remain.
Mobile Business results up on both flagship, mass-market models
Revenues at the mobile business rose to KRW 24.95 trillion from 23.32 trillion, with the operating profit improving to KRW 2.52 trillion from 1.51 trillion. Results were boosted by the sale of flagship Galaxy smartphones and changes made to improve the profitability of mass-market models.
Consumer Electronics helped by premium products
At the consumer electronics business, revenues went up to KRW 12.71 trillion from 11.79 trillion, led by the growing sales of premium products such as QLED TVs and new appliances. The operating profit lifted to KRW 0.81 trillion from 0.68 trillion.
Semiconductor business falls on continued softening of prices
At the semiconductor businesses, revenues dipped to KRW 16.79 trillion from 18.75 trillion, with the operating profit sinking to KRW 3.45 trillion from 7.77 trillion. Results were helped by higher demand from server customers and applications related to 5G network expansions but DRAM prices continued their downward trend at the memory business, despite rising shipments.
For mobile, Samsung sees demand picking up around mass-market models as major manufacturers expand their 5G smartphone lineups. Construction of 5G networks in China should also push demand for consumer products this year. The System LSI Business plans to expand its 5G chip business by promoting one-chip services for mass-market devices.
Display Panels falls on weak demand for some mobile screens
The display panel Business suffered from weak demand for some premium mobile screens, with widened losses from the large panel business. Revenues here declined to KRW 8.05 trillion from 9.17 trillion, but the operating profit sank to KRW 0.22 trillion from 0.97 trillion.
Seasonal effects to mark Q1, performance should improve for FY
Looking towards the first quarter of this year, Samsung expects weak sales due seasonality effects at memory chips, OLED and consumer electronics. These seasonal effects will limit profit at the Memory Business. At the Display Panel Business, the outlook is also negative, due here to slowing demand. At the Mobile Business, results will be steady quarter-on-quarter, as new flagship and foldable models up sales but also bring in additional marketing costs.
For the full year, overall performance should improve but Samsung still sees uncertainties in the global business environment. The company will start a flexible way of determining capex, in order to meet the changing demands of the market. It will still invest in infrastructure and mid to long term business opportunities.
Memory market conditions will likely improve gradually thanks to increasing demand from data center companies and 5G smartphone adoption. However, the actual pace of 5G expansion and its effects on DRAM content remain to be seen. The company expects inventory to return to levels seen in previous years within the first half of this year and will focus on transitioning to the next-generation of chip production.
At its mobile business, Samsung will look to improve profits by expanding the sale of premium models. The Network Business will focus on addressing the global 5G market as its Korean business shrinks following last year’s nationwide 5G adoption.
Lastly, at the Consumer Electronics Division, Samsung will push the sale of QLED 8K TVs and launch new premium appliances such as Bespoke and new lifestyle models.
