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Samsung's operating profit fell 69% to an eight-year low.

Published: 2023-01-06

Industry analysts tried to make forecasts for the preliminary results of the fourth quarter for Samsung Electronics yesterday, but the reality turned out to be worse than expected, as the company's own estimates materialized in a decrease in operating profit by 69% to $ 3.4 billion, which is the lowest value since the third quarter of 2014 . In fact, some analysts now do not rule out that Samsung will face an operating loss in the current quarter.

Samsung's quarterly revenue in the past three-month period decreased year-on-year by 9% to $55.4 billion. The company will publish a detailed report at the end of this month, but for now, only these two financial indicators can be used. It is noteworthy that Samsung shares reacted to this news with a growth of quotations by 1%, but in this direction they moved in sync with SK hynix securities. Experts attribute such dynamics to the hope of investors for a reduction in memory production, which will have a healing effect on the company's business. In the fourth quarter, memory production managed to grow by 10%, although the average selling price decreased by 28%.

Samsung Electronics said in October that the company was not going to cut its 2023 capex program, which was already at odds with competing Micron and SK hynix. Analysts say the intrigue now lies in Samsung's willingness to rethink its current year's capital expenditures, or to keep the same setup. Some industry experts are convinced that Samsung's financial performance will continue to deteriorate in the current quarter and it could end the period with an operating loss.

Samsung was forced to acknowledge that the fourth-quarter performance deterioration in the memory business was more pronounced than expected as customers continued to deal with inventory surpluses in a challenging macro environment. The direction of smartphones also showed a negative trend due to the protracted crisis in the economy.