News
South Korean vendor sees challenging conditions ahead in IT industry; outperforms Apple in Q4 smartphone shipments.
Samsung on Thursday reported year-on-year growth in operating profit in the fourth quarter of 2015 and the full year, but its comments on the challenging environment it expects to face in 2016 led to suggestions that earnings could fall going forward.
The South Korean company is feeling the pressure across its business, including at its devices unit, where it recorded "a slight quarter-on-quarter decrease in smartphone shipments," due to an inventory adjustment.
The vendor did not provide figures, but according to analyst numbers, it performed solidly compared with its rivals.
Strategy Analytics claims Samsung shipped 81.3 million smartphones in Q4, up from 74.5% million in the year-ago quarter, increasing its global market share by half a percentage point to 20.1%.
"This was Samsung’s fastest growth rate for almost two years and it helped Samsung to stay ahead of Apple and maintain first position," said Neil Mawston, executive director at Strategy Analytics.
Apple shipped 74.8 million iPhones in the same quarter, virtually flat on Q4 2014, giving it 18.5% of the market.
Samsung’s IT and mobile communications division, which is primarily made up of its handsets business, posted sales of 25 trillion won (€19 billion) in Q4, down from KRW26.29 trillion a year earlier. The unit generated an operating profit of KRW2.23 trillion, down from KRW2.4 trillion in Q3, but up by 14% on the year-ago figure.
The firm said the sales decline stemmed from an increased proportion of mid to low-end products, while higher marketing costs hit profit slightly.
The current quarter looks set to be challenging though.
Samsung predicts "slowing demand for smartphones and tablets" in Q1, due to seasonality, but said it hopes an enhanced product mix with new launches will help it stabilise sales and profits.
"As for the outlook for 2016, Samsung expects single-digit percentage growth in both the smartphone and tablet categories amid softening demand and intensifying competition," the vendor warned.
"Despite this challenging environment, the company will focus on increasing smartphone shipments and maintaining a double digit margin through releases of competitive devices and an optimized product portfolio," it added.
Across the business as a whole, Samsung admitted that it is "expecting challenges in 2016 to maintain earnings due to a difficult business environment and slowing IT demand."
In Q1 in particular, it sees weak seasonal demand and a slowdown in the IT industry, it warned, without providing specific guidance.
It posted KRW53.32 trillion (€40.6 billion) in sales across the group in Q4, up slightly from KRW52.73 trillion a year earlier. Operating profit increased by 16% to KRW6.14 trillion.
Full-year sales fell by 2.7% to KRW200.65 trillion, but operating profit grew by 5.5% to KRW26.41 trillion.
