Samsung Experiences Drop In Annual Net Profit for the First Time in Three Years
Samsung, the South Korean electronics giant, posted on Thursday that they had the first drop in their annual net profit in three years. Few days back, Apple announced that they attained the biggest profit in their history.
Samsung, the world’s largest Smartphone maker struggled this year in their mobile phone business due to the intense competition they had from the cheapest Chinese mobile phones. The company announced that they are expecting the business environment of 2015 to be equally challenging as last year.
According to the company, they had a net profit of $21.45 billion in 2014. This is 23.2 % less than that of the profit in 2013 and the first decline in profit since 2011.
The fall in profit was cushioned by the boom in the sales of high-margin chips in the fourth quarter of the business year. The operating profit was increased by 35.7% in the semi-conductor section, than the earlier year and it reached 2.7 trillion won in the period from October 2014- December 2014.
Though the annual profit is going down, the company is under pressure to increase the shareholder returns. Samsung Electronics has announced a dividend of 19,500 won which is more than the 13,800 won announced a year before.
The shares of Samsung experienced a fall during the morning trading in Seoul. The shares fell by 5000 won or 0.36% to 1,374,000 won.
The annual net profit figures were a great change for the company which has always made good profits year after year. The company is also facing a leadership change after continuous years of growth. The mobile division was the major profit maker of the company.
The misfortune of Samsung is the gain of the Californian based tech company Apple. They made a triumphant sales profit in their fourth quarter. Their net profit in the fourth quarter was a whopping $ 18 billion – this is the largest profit ever achieved by a public company.
Apple made this achievement possible by the sales of its iPhones, especially in the greater China region. They achieved double sales volume selling 74.5 million iPhones.
The fourth quarter net profit of Samsung was reduced by 27% and reached 5.3 trillion won.
The attractiveness of iPhone 6 overpowered the Galaxy phones from the Samsung and the low-end handset segment was taken over by the Chinese companies such as Lenovo, Xiaomi, etc.
Samsung is planning to reduce the number of releases of its Smartphone models in 2015.