Samsung posted its quarterly results for Q4 2013, announcing that net profits rose, but growth declined due to stronger Korean Won and increased competition from iPhone sales.
On Friday, January 24, Samsung released its financial results for the quarter ended December 31, 2013. The company reported net earnings of 7.3 trillion won (approximately $6.8 billion), a decline of 11 percent when compared to Q3 2013. This is the first time in nine quarters that the company has reported a drop in net earnings in comparison to the previous quarter.
The maker of the Galaxy smartphones and tablets, semiconductor chips, smart TVs and other consumer household electronics and appliances, said that its net earnings for the October-December period fell 11 percent from the third quarter to 7.3 trillion won ($6.8 billion). Analysts had estimated earnings of 7.5 trillion won. It's the first time in nine quarters that profit did not grow from the previous quarter. However, compared to Q4 2012, the net earnings for Samsung increased 4 percent.
Samsung blamed strong Won, high marketing costs towards the promotion of its Galaxy devices and also the one-time bonus paid to employees for the decline in net earnings for the company.
"Amid macroeconomic uncertainties such as a strong Korean won and increased concerns over possible quantitative easing (QE) tapering in the U.S., our earnings were lower than what the market expected due to a negative currency impact of around 700 billion won and a significant one-off expense of about 800 billion won, however, fourth quarter operational results were respectably strong," said Robert Yi, SVP and Head of Investor Relations at Samsung.
Samsung is one of the most popular smartphone makers globally; however, the company is facing a squeeze in profit margins due to the launch of new and cheaper iPhones.
Apple launched the iPhone 5c, which is relatively cheaper and affordable for customers looking for a pocket-friendly Apple smartphone. Moreover, Apple's deal with China Mobile is also expected to hurt Samsung's sales in China.
Samsung is also well-known for its bigger display handsets such as the Galaxy Note 3. Rumors also suggest that Apple has a phablet in the pipeline, which may give direct competition to the Galaxy Note 3. However, Samsung may get a boost in the smartphone space as it is said to be preparing for the launch of the Galaxy S5, which the company could showcase at the upcoming Mobile World Congress (MWC) in February.
Yi added that looking at the quarterly earnings trend, the company expects a weak first half but a strong second half, similar to 2013.
