Samsung Electronics flags one-third drop in Q4 operating profit

Samsung was hit by a series of setbacks in 2019, with chip stocks rising and prices falling, unlike market growth in previous years. The company's operating profit fell more than a third in the fourth quarter, the world’s largest maker of smartphones and memory chips on Wednesday.

The premium smartphone market has also grown fiercely competitive with buyers waiting longer before upgrading to new models.

But the figures beat expectations, analysts said, with chip demand starting to improve and strong smartphone sales. The forecast represented a relative improvement—in each of the first three quarters of 2019 net profits fell by more than half year-on-year.

Samsung Electronics is crucial to South Korea's economic health. It is the flagship subsidiary of the giant Samsung Group, by far the largest of the family-controlled conglomerates, known as chaebols, that dominate business in the world's 11th-largest economy.

In an earnings guidance statement, Samsung Electronics projected operating profits in the October to December period at 7.1 trillion won ($6.1 billion), down 34.2 percent year-on-year.

Sales were forecast to be flat at 59 trillion won, it added.

For full-year 2019, it predicted operating profits of 27.7 trillion won, down 52.9 percent, on sales down 5.8 percent to 229.5 trillion won. The company has been strained by a protracted trade dispute between China and the US, and been caught up in a diplomatic row between Seoul and Tokyo over historical disputes, with Japan imposing tough restrictions on exports crucial to South Korean tech giants in July.

In another shadow hanging over the firm, its vice chairman and de-facto leader Lee Jae-yong is on trial for the second time over the sprawling corruption scandal that led to the impeachment of South Korea's former president Park Geun-hye. A guilty verdict and long prison sentence would deprive the firm of its top decision maker.