Samsung Electronics' Operating Profit Halved Last Year... Strong Performance in Q4

27.71 Trillion KRW, Lowest Performance in 4 Years
Q4 Exceeds Forecast with 7.1 Trillion KRW
Semiconductor Bottom-Out Theory Prevails, Recovery Expected This Year

View of Samsung Electronics building in Seocho-gu, Seoul. Photo by Yonhap News

[Asia Economy Reporter Dongwoo Lee] Samsung Electronics' operating profit fell to the 20 trillion won level last year, marking the lowest point in four years. This is due to the semiconductor downturn. However, the fourth-quarter performance last year exceeded market expectations, leading to forecasts that the semiconductor market has bottomed out and will show a recovery trend this year.

Samsung Electronics announced on the 8th that its consolidated financial statements showed provisional figures for last year's sales and operating profit at 229.52 trillion won and 27.71 trillion won, respectively. Sales decreased by 5.85% compared to the previous year, marking the lowest since 2016 (201.8 trillion won). Operating profit also dropped by 52.9% from the previous year, the lowest since 2015 (26.4 trillion won).

However, the fourth-quarter results last year showed a somewhat different trend from the annual figures. Although sales fell short of 60 trillion won, operating profit remained in the 7 trillion won range, surpassing the market consensus (around 6.5 trillion won). Fourth-quarter sales were recorded at 59 trillion won, down 4.84% from the previous quarter (62 trillion won) and 0.46% from the same period last year (59.27 trillion won).

Operating profit was 7.1 trillion won, down 8.74% from the previous quarter (7.78 trillion won) and 34.26% from the same period last year (10.8 trillion won). Quarterly operating profit last year was in the 6 trillion won range during the first and second quarters, recovered to the 7 trillion won range in the third quarter, and exceeded 7 trillion won again in the fourth quarter, supporting the theory that the semiconductor market has bottomed out. This is attributed to increased demand for the main product, memory semiconductors, centered on servers and mobile devices in the second half of last year.

Although segment-specific results were not disclosed, securities firms estimated that the annual semiconductor operating profit last year decreased by more than 60% to around 13 trillion won. The display business segment was seen to have remained at 1.7 trillion won, down 35% during the same period due to China's low-priced LCD competition.

On the other hand, the wireless business segment saw favorable sales of premium products such as the Galaxy Note10 and Fold, and the home appliances segment also likely improved profitability significantly due to strong sales of premium TVs and dryers.

An industry insider said, "The memory semiconductor sector was sluggish throughout last year but had a positive impact as demand for inventory recovery increased, and smartphones performed better than expected," adding, "This year, it is expected that performance will improve quarter by quarter following a rebound in the semiconductor market."

This content was produced with the assistance of AI translation services.