Samsung quarterly profit drops 40% (amid reports that global smartphones shipments have hit a record high). ... Electrolux profit drops after failed GE deal. ... Caterpillar points to commodity hit.
SEOUL — Global smartphone shipments jumped a little more than 10% last year to an unprecedented 1.43 billion units, but a slowing global demand for smartphones and memory chips dealt a financial blow to Samsung Electronics.
The South Korea giant reported a 40% on-year drop in fourth-quarter net profit on Thursday,squeezed at both ends of the lucrative smartphone market with high-end competition from arch-rival Apple matched by cheaper players like China’s Huawei and Xiaomi. But Samsung was not alone, with Apple reporting earlier this week that sales of its popular iPhone rose slower than ever last quarter, raising questions about the future of the saturated smartphone market.
Net profit for October to December stood at 3.22 trillion won ($2.68 billion), below analyst expectations and down 39.7% from a year ago, the company said in a statement. Operating profit rose 16.1% on-year to 6.1 trillion won, in line with its earlier estimate.
Samsung said 2016 was expected to throw up continued challenges to maintaining earnings “due to a difficult business environment and slowing IT demand.”
Fourth-quarter earnings were down in the face of “global economic headwinds” including a sharp fall in oil prices, as the components side of the business was impacted by weakened prices for DRAM chips and LCD panels due to overall softer demand in the IT market and personal computers.
Samsung’s semiconductor business has helped offset slumping profits at the firm’s key mobile unit the last two years. But sluggish demand for handsets and computers worldwide drove down prices for memory chips, squeezing margins in the semiconductor unit, which posted the first drop in quarterly operating profit for about two years.
Electrolux Posts Profit Drop After Failed GE Deal
STOCKHOLM — Electrolux announced Thursday that net profit plummeted by nearly a third last year, wrapping up a year marked by the failed acquisition of General Electric’s appliance business with a final-quarter loss.
The company announced a 30% drop in net profit to 1.57 billion kronor ($184.52 million) while in the fourth quarter alone it saw a loss of 394 million kronor ($46.31 million).
Electrolux abandoned a $3.3 billion deal to buy General Electric’s appliance business in December after it ran into opposition from U.S. competition authorities. Most of the financial impact of the failed bid fell in the fourth quarter, with the company announcing a 1.66 billion kronor charge ($195.10 million) that took it into the red.
Electrolux announced earlier this month that its American CEO Keith McLoughlin, who orchestrated the GE deal, would be replaced by Jonas Samuelsson of Sweden as of Feb. 1.
Caterpillar Reports Quarterly Loss on Commodity Hit
Industrial giant Caterpillar reported a fourth-quarter loss Thursday and trimmed its sales outlook for 2016, warning that commodity prices would probably stay low.
Caterpillar’s loss for the quarter ending Dec. 31 came in at $87 million, compared with $757 million in profits in the year-ago period. Results were dented by $682 million in severance and other expenses tied to employee layoffs and facility closures. Revenues fell 22.6% to $11.0 billion.
“Cost management, restructuring actions and operational execution are helping the company while sales and revenues remain under pressure from weak commodity prices and slowing economic growth in developing countries,” Caterpillar CEO Doug Oberhelman said. “We took tough but necessary restructuring actions in 2015 — and they were significant.”
Caterpillar trimmed its 2016 sales outlook, saying it “does not anticipate improvement in world economic growth or commodity prices.” Caterpillar now expects 2016 sales and revenues of about $42 billion, down about $3.5 billion from its October forecast. Caterpillar projected 2016 profits of $3.50 per share, two cents above analyst expectations.
Copyright Agence France-Presse, 2016