Tech

Samsung says quarterly profit likely fell 34%

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Key Points
  • Smartphone giant Samsung Electronics said Wednesday its operating profit for the three months that ended in December likely fell about 34% from a year ago.
  • Operating profit for the fourth quarter is expected to be 7.1 trillion Korean won ($6.02 billion), down from the 10.80 trillion won Samsung posted a year earlier.
  • But that number beat the 6.5 trillion won predicted by Refinitiv SmartEstimate.
Samsung logo at store in Shanghai. A South Korean multinational conglomerate.
Alex Tai | SOPA Images | LightRocket | Getty Images

Smartphone giant Samsung Electronics said on Wednesday its operating profit for the three months that ended in December likely fell about 34% from a year ago.

Operating profit for the fourth quarter is expected at 7.1 trillion Korean won ($6.02 billion), down from the 10.80 trillion won Samsung posted a year earlier. That projection was better than the 6.5 trillion won predicted by Refinitiv SmartEstimate.

Samsung expects consolidated sales for the quarter to be around 59 trillion won, which missed market consensus of around 60.7 trillion won from Refinitiv SmartEstimate. That was likely due to declines in the company's revenue from the display business, which supplies smartphone and TV screens, as well as lower prices for memory chips, according to Sanjeev Rana, a senior analyst at CLSA.

In the previous three quarters, Samsung's operating profit had more than halved from the same period a year earlier.

Like other chipmakers, the South Korean tech giant has been struggling in an environment where price and demand for memory chips have been low for a prolonged period, due to inventory adjustments and a supply glut.

Memory components used in smartphones and data centers make up Samsung's main profit-making business.

Operating profit is predicted to be better than expected due to cost reductions in the memory business, Rana told CNBC's "Street Signs" on Wednesday. "We think that for smartphones, they had some one-off gains related to some provision reversals, the details of which are likely to be announced at the end of this month," he added.

Samsung is set to reveal official results later this month.

Analysts say there could be a slow recovery in the semiconductor space as market conditions improve and after the U.S. and China reached the first phase of a trade deal to ease tariff tensions.

For its part, Samsung previously predicted "solid" demand in the memory business for 2020, but cautioned against lingering uncertainties. In the three months that ended in September, the tech giant posted an operating profit of 7.78 trillion won, which was up almost 18% from the quarter before.

Samsung shares traded higher by about 1.8% on Wednesday.