The biggest smartphones manufacturer in the world – Samsung Electronics Co. – announced its slowest profit growth since 2011. At the same time, high-end customers are being tempted by new iPhones of Apple Inc.
Samsung Electronics also revealed in a filing today that its net income, excluding minority interest, increased by 5.4% and reached 7.22 trillion won (6.7 billion dollars) during the last three months of 2013. The company also said this is its slowest profit growth since the fell during the third quarter of 2011.
Samsung is also the biggest technology company in Asia. However, the smartphone maker is currently facing some profit margins decrease, thanks to the fact new iPhones and cheaper mobile devices produced by Lenovo Group Ltd. and Huawei Technologies Co. mark higher sales than the ones of Samsungs Galaxy devices.
About 700 billion won from the earnings of the company were also cut by currency moves. Another reason for this is the fact that the company made bonus payments to its employees and invested in marketing, because it prepares the release of its new S5 high-end device to compete with Apple Inc. A special bonus estimated to 800 billion won was paid by the company to its employees to celebrate the 20th anniversary of the management strategy of Samsungs Chairman Lee Kun Hee.
One of the analysts working for NH Investment & Securities Co. – Lee Sun Tae, said: “Earnings will remain stagnant this year as the explosive growth of the past two to three years seems to have ended. Although the lower-end smartphone maker will continue to grow, the scale of profit from that segment doesnt compare to the high-end market so the growth seems limited.”
More than 80% of Samsungs sales are generated from outside its home market. However, the company has been influenced by the rising South Korean currency, which cuts the value of overseas sales. The company also announced that its capital spending in 2014 will be similar to the one in 2013, which was 23.8 trillion won. Samsung Electronics Co. also announced that it forecasts its smartphone shipments in the first quarter of 2014 to rise at a “mid-single digit” rate from the ones in the fourth quarter of 2014.
According to Bloomberg, the current share price of Samsung Electronics Co. Ltd is 0.62% up, and its one-year return rate is 10.01% down.
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