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Samsung has today released its preliminary earnings guidance for the 2014 fourth quarter, revealing it expects around a 37 per cent decline in operating profit year-on-year.Samsung estimates its consolidated operating profit for the quarter will be approximately 5.2 trillion won (around $5.8 billion), down from 8.3 trillion won year-on-year.
Sales for the quarter are expected to be approximately 52 trillion won, down from 59 trillion won year-on-year.
The expected results come after a tough year for Samsung’s smartphone business, in which it saw its market share decline in the face of increasing pressure from both the premium and budget ends of the market.
While Samsung remains the world’s number one smartphone vendor, Gartner last year reported its worldwide smartphone market share for the 2014 third quarter dropped from 32.1 per cent to 24.4 per cent year-on-year.
Competitors such as Apple continue to maintain pressure at the premium end of the market, while at the budget end of the market, new competitors such as Xiaomi have emerged, taking market share.
Samsung’s profit expectations have, however, exceeded analyst estimates averaging 4.8 trillion won, compiled by Bloomberg, with Bloomberg reporting demand for high-margin chips is cushioning the impact of the decline in Samsung’s smartphone business.
“Earnings came better than thought, largely because of a stronger performance at its component businesses, such as chips and panels, combined with the foreign exchange effect,” Bloomberg reported Lee Do Hoon, an analyst at CIMB Group Holdings in Seoul, as stating.
“The Note 4 had a positive impact on Samsung’s component units in the quarter, which largely helped offset negative factors came from its mobile and TV businesses.”
