Samsung operating profit plunges 60pc to 6.2tril won

SEOUL: Samsung Electronics Co reported its worst operatingprofit drop in more than four years, buffeted by falling memory-chip prices and slowing smartphone sales.

Operating income fell 60 per cent to about 6.2 trillion won (RM22.47 billion) in the three months ended March, preliminary results released from the South Korean company showed yesterday.

That was the biggest decline since a similar drop in the third quarter of 2014. Analysts surveyed by Bloomberg had expected a 56 per cent slump to an average of 6.93 trillion won.

Samsung issued a rare warning last month that its results would be short of estimates, reflecting slower orders from data centre owners such as Amazon.com Inc and handset makers including Apple Inc.

That’s pushed down prices for both DRAM and NAND memory and compounded the struggles for the company as it counts on new devices such as the Galaxy S10 smartphone it launched, here, yesterday, to help it fight against increased competition.

The Galaxy S10 is the world’s first available smartphone with built-in fifth-generation communications and South Korea is seeking to build a lead in the transformative technology.

“We do expect server DRAM demand to pick up as well as the S10 sales and foldable-phone sales to be better than expected going into the second half,” said Daniel Yoo, global strategist at Kiwoom Securities. “Earnings pickup should lead the share price going into the future.”

Sales for the quarter were 52 trillion won, missing expectations for 53 trillion won. Samsung won’t provide net income or break out divisional performance until it releases final results later this month.