Samsung warns of major profit drop

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Samsung CEO
// Samsung says operating profits will drop nearly 30% in fourth quarter
// Its sales are also expected to drop more than 10%
// It attributed the fall to a slowdown in the Chinese market, mirroring Apple’s warning last week.

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Samsung has become the second major tech retailer in less than a week to blame the Chinese market for its falling profits.

The South Korean company warned today that it expected its fourth quarter operating profits to dramatically miss consensus estimates of 13.2 trillion KRW (£9.2 billion), dropping 29 per cent year-on-year to 10.8 trillion KRW (£7.6 billion).

Sales are also expected to have dropped by more than 10 per cent over the three-month period to 59 trillion KRW (£41 billion).

This marks its first fall in quarterly operating profits in two years, which it blamed on stagnant smartphone sales and higher marketing costs in the final quarter.

It added that “mounting macro uncertainties” such as the economic slowdown in China and the looming trade war between it and the US also took its toll on its memory chip business, dragging down overall figures.

This mirrors a shock warning to investors from Apple, stating that it expected revenues for the final three months of the year to come in at around $84 billion (£66.8 billion), down 10 per cent from previous estimates of between $89 billion (£70.7 billion) and $93 billion (£73.9 billion).

This would mark a five per cent drop on the same period last year, which its chief executive Tim Cook attributed almost entirely to a dramatic slowdown in demand in the Chinese market.

Though this is good news for Samsung in that Apple is a key rival, it is also one of Samsung’s largest customers of Oled panels and chips.

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