Millennium Post

Samsung rings in first profit dip in 3 years

The South Korean firm, whose key mobile phone operations have struggled in the face of intense competition from cut-price Chinese rivals, also warned that it expected 2015’s “business environment... to be as challenging as 2014.”

The tech giant said on Thursday it recorded a net profit of 23.4 trillion won ($21.45 billion) in 2014, down 23.2 per cent from a year ago and the first decline since 2011. Operating profit fell 11.7 percent to 25 trillion won in the year and sales also tumbled 10 percent to 206 trillion won.

The fall was cushioned in the fourth quarter by a boom in high-margin chip sales that helped offset the downturn in the key mobile sector, with operating profit in the semi-conductor division rising 35.7 percent to 2.7 trillion won in the October-December period from a year earlier.

Under growing pressure to boost shareholder returns, however, the company still managed to announce an increased dividend of 19,500 won a share, up from 13,800 won a year earlier.

Samsung shares fell 0.36 percent, or 5,000 won, to 1,374,000 won in morning trading in Seoul.

The annual profit figure marked a dramatic reversal for the company, which is also facing a once-in-a-generation leadership change, after several years of stellar growth, driven by the once all-conquering mobile division. It contrasted sharply with California tech titan Apple whose fourth quarter net profit stood at $18 billion, the largest ever made by a public company.

Samsung’s fourth quarter net profit was down 27 percent. The company’s flagship Galaxy phones have suffered in the high-end market thanks to the popularity of the iPhone 6, while its dominance of the middle- and low-end handset segment has been challenged by Chinese firms such as Huawei, Xiaomi and Lenovo.
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