Samsung’s holiday profits hit hard as inflation bites at buyers
Earnings season has come around once again and it’s expected to be a doozy as many businesses are reporting less money coming in during the holidays in 2022 than in 2021. Samsung Electronics — which, we remind you, is the largest Android device manufacturer in the world and the producer of some of itsbest phones— has made its disappointing numbers official, but it does come out of the year with a big boast and big shareholder returns.
The company’s fourth quarterhad all the pressures put on it with sales dropping 8% from the same time in 2021 to KRW 70.46 trillion ($57 billion) while costs, which were relatively stable year-on-year, rose as a proportion of revenues. Operating turnover thusly shrunk a whopping 69% to just KRW 4.3 trillion ($3.5 billion). All these figures aremarked declines from Q3as well.
Good news for shareholders, though. The company made a one-time tax adjustment due to a change in Korean law and is now reporting inflated net income leading to an abnormally high earnings of KRW 3.46 per share. That said, the adjustment doesn’t reflect a tax refund or its real tax payments, so perhaps it’s something we shouldn’t read too much into.
The company reported slower components sales including for mobile device displays, memory, and other semiconductors. Revenues from consumer appliances and smartphones also fell — no surprise if you’ve caughtrecent analyst notes. On the flip side, Samsung’s chip production business saw growth to new heights, its cellular networking equipment also bucked the current trend, and large-panel TVs continued to perform nicely.
In terms of full-year performance, the company reported an 8% bump in revenues to a record KRW 302 trillion, but a 16% slide in operating profits to KRW 43.38 trillion.
Looking to 2023, the company is looking to push its mobile division hard this year, targeting “strong sales and solid profitability” with increasingly competitive releases — we heard a hint of this drive from a Samsung executivelast month. At its foundries,first-gen 3nm chipsare moving out at volume with good yields while the medium-term focus moves to developing its second-gen process and getting customers on board for orders.
Largely speaking, though, the conglomerate is forecasting depressed demand through to at least the second half of the year. It’s a prediction that stands at the mercy of central banks and what they’ll do with interest rates to address how prices are behaving.
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