Samsung Electric Q4 profit guidance misses expectations

Samsung Electronics' headquarters in Seoul.
Samsung Electronics' headquarters in Seoul. PHOTO: AFP

SEOUL (REUTERS) - Tech giant Samsung Electronics said on Friday (Jan 8) its fourth-quarter operating profit likely rose 15 per cent from a year earlier, missing expectations and fuelling concerns it may be in for another tough year due to slack gadget sales.

Samsung said in a regulatory filing its October-December operating profit would likely be 6.1 trillion won (S$7.3 billion), compared with a 6.6 trillion won Thomson Reuters SmartEstimate derived from a survey of 30 analysts. Revenue likely rose 0.5 percent to 53 trillion won, the firm said without elaborating.

Shares of the world's top maker of memory chips and smartphones ended down 7.7 per cent for the year on Thursday after touching their lowest level since Oct 6, 2015, as slowing growth in China and weaker emerging market currencies undercut sales of consumer electronics and gadget components.

Though Samsung will not disclose detailed earnings until late January, analysts and investors say its profits were likely undercut by weaker sales of the chips and displays the firm leaned on in 2015 to overcome the softening smartphone market.

Some believe the firm is headed towards its second profit drop in 3 years in 2016.

"Currently there's no visible sign of demand recovery," said Avril Wu, research director at market analysis firm DRAMeXchange, adding that DRAM industry revenue would likely fall 1.4 per cent to US$42.9 billion this year.

Samsung Chief Executive Kwon Oh-hyun on Monday warned the maker of Galaxy smartphones faced challenges as weak global economic growth persists. This added to concerns that tech industry firms such as Samsung and Apple Inc will face earnings pressure in coming quarters.

Apple's shares fell below $100 on Wednesday for the first time in nearly five months on reports of slowing shipments for the iPhone 6S and 6S Plus.

LG Display, the world's top liquid crystal display maker, also warned of tough conditions for the January-March quarter and said the panel industry faced oversupply problems.

Chinese firm Huawei Technologies meanwhile said its 2015 smartphone shipments defied the slowdown and jumped 44 per cent, underscoring the tough competitive environment for market leaders Samsung and Apple.