It’s been a torrid few months for Samsung’s profits. After the lofty heights of last year’s profits, the latest batch of earnings data isn’t going to improve the mood at the South Korea-based company any time soon.
For the last three months until September this year, Samsung reported sales of 47 trillion Korean won (around $44 billion or R494 billion) with 4.1 trillion won in profits ($3.85 billion or R43 billion) which all sounds fantastic until you take into account the fact that the profit for the same three months last year was more than double that figure – 10.2 trillion won ($9.5 billion or R107 billion).
The fall in sales has been attributed to the same combination of forces that has been hurting Samsung the whole year – pressure at the bottom end of the smartphone market coming from Chinese vendors like Xioami and Lenovo who seem to be willing to accept much smaller margins for the increase in sales that lower prices bring.
While at the higher end of the market, the new iPhone 6 poses a significant challenge the Galaxy S5 and the iPhone 6 Plus looks set to take some sales from Samsung in the phablet category it invented.
With lower smartphone sales comes another problem for Samsung, a company who manufactures many of its own components including the processor, RAM, storage and displays for its smartphones. It creates a knock-on effect of reduced sales for the rest of the business units in the company.
The Galaxy Note 4 phablet which was launched last month and will go on sale in South Africa on the 17th of October is expected to lift sales for the next few months and (hopefully) increase the profit for the next set of financials released by Samsung.[Source – Samsung, Via – Bloomberg, Image – Shutterstock]