Samsung Warns of Dismal Q1 Earnings
27 March, 2019
Samsung Electronics took the rare step on Tuesday of warning against dismal first-quarter earnings even before it releases preliminary figures on April 5.
"We decided to make an announcement to help investors understand that earnings are expected to have come in below market expectations due to the poor performance of some business divisions," a Samsung spokesman said.
Analysts had predicted relatively poor earnings due to a slowdown in the semiconductor market. They expect Samsung to post W7.1 trillion in operating profit for the quarter, less than half of the W15.6 trillion it earned a year ago (US$1=W1,135).
Samsung said display and memory chip businesses fared poorly due to an onslaught of cheaper products from Chinese rivals. Sales were especially dismal for small and mid-sized OLED panels for smartphones.
Smartphone sales growth has slowed worldwide, and Apple, which is a major buyer of Samsung's displays, is no exception. Meanwhile Chinese display makers like Tianma and BOE drastically boosted production volume, causing Samsung's prices to plummet.
Samsung explained that semiconductor sales slowed while prices of DRAM and NAND flash chips fell more steeply than expected because big IT companies are cutting back on investment.
Industry watchers expect Samsung's earnings to remain sluggish in the second quarter.
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