Samsung Set to Experience Operating Profit Drop for Q1: Report
Click to start listening
Synopsis
Samsung is anticipated to report a decline in its operating profit for Q1, primarily due to weak semiconductor performance, with estimates suggesting a drop to 4.7 trillion won. This would mark the third consecutive quarterly decline, heavily impacted by subdued demand in the semiconductor market.
Key Takeaways
- Expected decline in Q1 operating profit.
- Projection of 4.7 trillion won ($3.2 billion).
- Third consecutive quarter of profit decreases.
- Weak demand for IT devices impacting sales.
- Potential recovery in Q2 anticipated.
Seoul, March 31 (NationPress) Samsung is projected to experience a decline in operating profit for the first quarter, primarily attributed to underperformance in the semiconductor sector, according to a report released on Monday.
The company's operating profit for the January-March timeframe is estimated to be 4.7 trillion won ($3.2 billion), indicating a 27.8 percent decrease compared to the same period last year, and a 26.6 percent drop from the previous quarter, as per a recent analysis by Yonhap Infomax based on earnings predictions from various brokerage firms.
If this projection holds true, it would signify the third consecutive quarter of profit declines for Samsung Electronics. Its operating profit decreased from 10.4 trillion won in Q2 2024 to 9.2 trillion won in Q3, and further down to 6.5 trillion won in Q4, as reported by Yonhap news agency.
The decline is mainly due to the subpar performance of the company's leading semiconductor business.
Weak demand for information technology (IT) devices and heightened competition in the global memory market have significantly impacted Samsung Electronics, which heavily relies on traditional memory chip sales.
Additionally, the anticipated drop in sales of high bandwidth memory (HBM) chips due to U.S. export restrictions on semiconductor sales to China adds more pressure.
Consequently, Samsung Electronics' semiconductor division is forecasted to either break even or incur a loss during the first quarter.
If a loss materializes, it would mark the first occurrence since Q1 2024, when it concluded a five-quarter losing streak.
Nevertheless, analysts predict a turnaround in Q2. A potential recovery in the demand for IT devices, alongside major companies finishing inventory adjustments, may assist in stabilizing Samsung Electronics' profits.
Brokerage firms forecast the company's operating profit to increase to 5.6 trillion won for the April-June period, compared to the estimated 4.7 trillion won for Q1.
"With memory prices stabilizing earlier than anticipated in Q2 and a rise in mobile dynamic random access memory (DRAM) orders from China, Samsung's earnings are expected to recover after reaching a low in Q1," stated Lee Soo-rim, an analyst at DS Investment & Securities.
Samsung Electronics is set to disclose its first-quarter earnings guidance in early April.
