Samsung continues to see sharp decline in its operating profits, marred by intensified smartphone rivalry from Apple, as well as from Chinese and Indian companies like Xiaomi and Micromax. The electronics giant saw a steep 39% decline in profits.
The South Korean company recorded operating profits of 5.98 Trillion Korean Won as against 8.49 Trillion Won for the same quarter an year ago. That represents a just under 30% drop in its operating profits. As for net profits, the company gained 4.63 Trillion Won (about $4.35 billion), a 39 percent drop from the 7.49 trillion won it reported a year ago.
This figure fell way below analysts’ expectations, as well as Samsung’s own forecast for operating profit of 5.9 trillion won. Revenue too tanked by a hefty 12% to 47 Trillion Won.
So what hurt Samsung despite decent sales of its Galaxy S6 and S6 Edge smartphones ?
Well, as has been the case with Samsung’s smartphone business for quite sometime now, the Korean giant continues to face stiff competition from Apple, and an even stiffer one from brands like Xiaomi and Micromax. In fact, if we compare Apple’s just released earnings with Samsung’s it doesn’t even look like a fair competition anymore.
While on one hand Samsung continues to loose its grip in Asian giants India and China, Appel on the other hand continues to make surging profits in both nations. In fact, Apple’s sales in China outpaced those in the US for the first time ever and continues to grow, as middle class society in developing nations continue to grow at rapid pace. In India too, Apple just recently crossed the $1 Billion revenue mark, and plans to foray aggressively into the subcontinent in coming years.
Samsung, despite seeing a growth in smartphone sales on a QoQ basis, still warned that smartphone and tablet demand will stagnate due to continued weak seasonality. The company further said that it expects earnings improvement led by increased high-end sales with S6 global expansion, while smartphone shipments to remain at similar level due to decreased mid/low-end sales.
Talking about is 2015 Forecast, Samsung expects product/marketing competitions to intensify amid a slowdown of smartphone growth.The company also feels that there is a risk for weaker demands due to exchange rate impact (e.g. weak €).
On the other hand though, Samsung is expecting growth in its Consumer Electronics division, powered by an increasing demand of UHD amid competition over new technologies. The company also expects premium product demand and demand in US to increase.
Samsung’s LCD TV shipments increased YoY within the regions that are not impacted by exchange rates, particularly in North America and Asia, where it saw 8% and 16% YoY growth respectively.
Portion of premium products(UHD/Curved) continued to increase, specially its UHD TV segment, which saw a 11% growth in 2015’s First quarter,a s compared to 8% in 4Q’2014.