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Samsung’s Best Financial Year Ever Offset by a Poor 4thQuarter
February 04, 2019

Samsung Electronics early guidance for calendar Q418 was bad and as predicted the company’s 10.8 trillion-won (~$9.7 billion) operating profit is down 29 percent Y/Y. Revenue dropped 10% from a year earlier to 59.27 trillion won ($53.3 billion). Samsung earnings were affected by falling demand for memory chips, usually its biggest profit driver, as well as slowing smartphone shipments and increased competition for mobile displays. The company doesn’t expect demand for memory to pick up this quarter, either, and is warning of weaker full-year performance overall with essentially flat smartphone sales. Smartphone sales were down 5.5% (Y/Y) to 70.4m in the quarter, while industry worldwide shipments were only down 4.9%. OLED display earnings fell slightly sequentially despite strong demand for flexible OLED panels due to growing competition between rigid OLED panels and LTPS LCD panels. There have been reports that Samsung was considering getting out of the rigid OLED display market given that the strong LTPS LCD competition is driving prices so low that margins are below Samsung’s standards. 
The decline in the final quarter wasn’t enough to stop Samsung Electronics from setting record financial results for the full 2018 year and the company believes the upcoming Galaxy S10 series will help “prop up sales and business performance in the coming months” given slow sales of the S9 failing, Samsung needs a hit this year. Overall 1Q guidance was for weaker results in semis, TV, and displays, with mobile expected to see more positive momentum as the Galaxy S10 line is shipped, and Samsung indicated that they expect the semi business and the flexible OLED display business to improve in 2H, with at least the display side likely seeing demand from Applereturning in 3Q.