Samsung's Q4 2023 Earnings: 35% Profit Decline, Below Forecast Expectations

Samsung Electronics (KS:005930) has anticipated a 35% year-on-year decline in its operating profit for the fourth quarter of the previous year, attributing it to the persistently weak demand in its core semiconductor division. The global giant, renowned for being the largest producer of memory chips and smartphones, projected its fourth-quarter operating profit at 2.8 trillion won ($2.1 billion), marking a decrease from the 4.3 trillion won recorded during the same period in 2022.

This forecast falls short of the average analyst estimate of 3.9 trillion won, as reported by Yonhap Infomax, the financial data arm of Yonhap News Agency. Samsung also estimated a 4.9% decrease in fourth-quarter sales, amounting to 67 trillion won, according to a regulatory filing.

For the entire year of 2023, Samsung foresees an 85% plunge in its operating profit, reaching 6.54 trillion won. Notably, this marks the first time since the 2008 global financial crisis that Samsung's annual operating profit has fallen below the 10 trillion won threshold. Predictions also indicate a 15% decline in annual sales to 258.16 trillion won for the year.

Following the announcement, Samsung's shares experienced a marginal increase of up to 0.65%, showcasing some resilience in the market. Analysts, however, had expected Samsung's semiconductor division to report an operating loss of approximately 2 trillion won for the past year.

Han Dong-hee, an analyst at SK Securities, shared insights with Yonhap Infomax, highlighting that Samsung opted to belatedly curtail semiconductor production in the previous year to alleviate the effects of a supply glut. Despite challenges in the semiconductor sector, analysts predict a robust profit from Samsung's smartphone division, bolstered by strong sales of flagship handsets throughout the year.

(With Agency Inputs)