SEOUL – Samsung Electronics expects operating profits in the third quarter to fall 31.7%, the South Korean tech giant said in a statement today, after a global economic downturn hit demand for consumer electronics.
The latest forecast is the company’s first projection of a year-on-year decline in profit for nearly three years.
Operating profit for July to September was predicted to reach 10.8 trillion won (RM34.7 billion), down 31.7% from 15.8 trillion won a year earlier, the world’s major maker of smartphones and memory chips said in a statement.
But the company said it expected sales to increase by 2.7% from the same period last year to 76 trillion won.
The firm is the flagship subsidiary of the giant Samsung Group, by far the biggest of the family-controlled conglomerates that dominate business in Asia’s fourth-largest economy, and is crucial to South Korea’s economy.
Until the second quarter of this year, Samsung, along with other tech companies, significantly benefitted from strong demand for electronic devices – as well as chips that power them – during the pandemic.
But the global economy is now facing multiple challenges, including soaring inflation, rising interest rates and a growing threat of a broad debt crisis.
The situation has been exacerbated by Russia’s invasion of Ukraine – which spurred a surge in energy prices and pushed global food prices up – along with China’s adherence to a strict zero-Covid-19 policy.
“If you look at the current macroeconomic environment, the demand for consumer segments such as smartphones, and PCs remains weak,” Counterpoint research analyst Neil Shah told reporters.
And “almost a third of Samsung’s revenues and almost 70% of operating profits comes from semiconductor divisions and particularly memory,” he added.
The company is expected to release its final earnings report at the end of this month. – AFP, October 7, 2022
