Samsung has published its final earnings report for Q4 2022 and FY (financial year) 2022. As suggested by its earnings guidance earlier this month, the company suffered a massive profit decline last year, particularly in the final quarter. Its operating profit in the year-ending quarter hit an eight-year low.
According to Samsung’s press release, the company generated KRW 70.46 trillion (approx. USD 57.16 billion) in consolidated sales revenue in the final quarter of 2022. While that is a healthy figure comparable with the past years, the Korean firm’s profits weren’t up to the mark.
Rising manufacturing costs and component prices meant it only made KRW 4.31 trillion (approx. USD 3.5 billion) in operating profits between October and December last year. That marks a 69% decline from the KRW 13.87 trillion it made during the same period in 2021. It is Samsung’s lowest Q4 earnings in the past eight years.
The Korean behemoth’s operating profits for the full year of 2022 were also lower than in 2021. It made KRW 43.38 trillion (approx. USD 35.19 billion) last year, down 16% from KRW 51.63 trillion in the year before.
However, a global price increase meant that the annual revenue reached an all-time high of KRW 302.23 trillion (approx. USD 245.18 billion) in 2022. The previous historic high was KRW 279.6 trillion in 2021. Samsung’s profit decline despite a healthy revenue increase tells you that the company significantly reduced its profit margin last year.
Weak demand for memory chips affected Samsung badly in Q4 2022
Samsung is the world’s largest vendor of smartphones and memory chips. But, the company makes more money from the latter business. Well, it did until Q4 2022. The Korean behemoth only took home KRW 0.27 trillion (approx. USD 218 million) from the entire semiconductor businesses in the year-ending quarter.
That’s due to the weak demand for memory chips induced by the global economic headwinds that have made consumers spend cautiously. The entire tech industry has been hit hard by this global economic downturn.
Unfortunately, Samsung isn’t expecting things to improve anytime soon. The company has already estimated its semiconductor profits to be halved in 2023, which doesn’t sound good for its business. It plans to secure profitability this year by optimizing operations and managing costs.
The firm will also focus on the market for premium products, such as high-end QLED TVs, which usually have higher profit margins. Foldable smartphones should be another area of focus for Samsung. It will launch the Galaxy Z Fold 5 and Galaxy Z Flip 5 in the second half of the year. The Galaxy S23 series flagships will arrive tomorrow.
2023-02-01 15:10:09