Samsung predicts weak first half in sales

Samsung predicted on Friday a weak performance in the first half of 2014, after having disclosed sharp downturn in profits in the fourth quarter.
Lee Jin-man/AP
Largest manufacturer of smartphones in the world, the South Korean company reported that growth in its mobile Division, which accounts for more than half of the company's profit, is parked. Another problem has been the exchange rate volatility, which affected the earnings of the company at 700 billion won ($ 651 million) in the period.
In addition, the company had to shell out another 800 billion won at once to pay bonuses to employees.
Samsung's net profit in the fourth quarter rose 3.7% compared with the same period last year, but decreased significantly compared to 25.6% high recorded in the third quarter, once the healthy margins the company's chip unit are no longer sufficient to offset the cooling of the profits of the series of Galaxy smartphones.
"Amid the macroeconomic uncertainties, as the appreciation of the won and the increasing concerns about the withdrawal of economic stimulus in the United States, our earnings were lower than the market expected," said today in a statement the Director of investor relations for the company, Robert Yi.
The net profit reported by the three Samsugn months ended December rose to 7.3 trillion won, down from 7.0 trillion won a year earlier, but well below the 8.2 trillion in the third quarter of 2013, which was the seventh quarter of high.
Smartphone business margins were under pressure in 2013, before the expansion in sales of appliances of lesser value and heavy investments in marketing. The operating profit margin for the business fell from 17.8% in 2012 to 16% in 2013.
Investors are worried about the fall of the company's stock price and a lack of clarity about future growth, before the backdrop of decline in average selling prices of smartphones.
Another challenge is a new round of patent dispute with Apple, scheduled to go to trial in March, involving the latest range of Samsung products, like the smartphone Galaxy S III. Analysts expect more provisions to cover possible future costs.