- Samsung reports a 69% drop in operating profit in Q4
- Plummeting smartphone sales hit its semiconductor branch, its historic cash cow
- The year 2022 remains good for the Korean giant
The end of 2022 has been complicated for Samsung. The South Korean giant has just released its results for the fourth quarter, and they are not good. The group recorded a turnover of 52.7 billion euros, a decrease of 8% compared to the previous year. More disturbing, operating profit plummets by 69% to reach 3.2 billion euros.
The division Device Experience Business was unable to slow the fall with an operating profit of only 1.2 billion euros. Only the Samsung Display branch, which produces smartphone screens (especially high-end) saves the furniture. Well helped by sales of iPhone 14 Pro (equipped with OLED screens made in Samsung), this branch recorded revenues of 1.36 billion euros.
The smartphone market carries Samsung in its fall
Supplier of many components for smartphones, Samsung has paid the price for a declining market. Smartphone sales indeed collapsed in the fourth quarter of 2022, reaching their lowest level in 15 years!
Samsung Mobile is therefore logically affected by this trend. The company says its decline in revenue and profit is partly due to the slowdown in smartphone sales. The South Korean points to weak demand for entry-level and mid-range models, which usually account for the bulk of its sales.
Since the smartphone market is doing badly, so is that of components. Between shortages, stock problems and customer reluctance, Samsung’s Semiconductor Business (Device Solutions Business), usually the most profitable for the company, recorded a disastrous operating profit of 202 million euros. Barely enough to balance.
Samsung optimistic for 2023
Despite this bad trimester, 2022 remains a good year for Samsung. The group recorded 226.1 billion in turnover for the year, an increase of 8% compared to 2021. Samsung manages to cushion the unfavorable macroeconomic context a little and still records an operating profit of 32.4 billion euros (down 8% compared to 2021).
For 2023, the Korean giant is cautious and expects the inflationary context as well as the war in Ukraine to continue to have effects on its results. But he plans a recovery in sales from the second half of 2023 particularly in the premium/ultra-premium and entry-level segments.
From February 1, 2023, Samsung will be able to take the temperature of the market. It will launch its new Galaxy S23 Series which, according to the latest information, would be small evolutions of the previous generation. On the other hand, prices could be revised upwards. A trend that should extend to all manufacturers in 2023.