Date: 7th April 2019
Samsung Electronics said on Friday that the company faced a drop of more than 60 percent in profit before tax for the first quarter of the financial year. It comes as the company claims the market to be weakening for its products.
The smartphone and chip maker reported that the sales revenue for January to March was 52 trillion won, which is 14 percent less than that of the last financial year.
The Samsung Group is the world’s largest family-owned conglomerate. Considering the size of the company, the declining sales revenue and profits are definitely a matter of concern for the South Korean economy.
While the market for smartphones and chips has experienced various fluctuations in demand and prices over time, the company has maintained high profits in the past. One of the setbacks for the company was imprisonment of its de facto chief.
The company, despite its resilient nature, is facing declining profits majorly due to the weakening markets of chips. The global chip market is receiving higher supply and, consequently, lower prices. This effect is further strengthened by the lower demand in the market.
The company is in the process of getting its profits up. It said that it would work on its cost structures, trying to reduce it, with using resources more efficiently.
Samsung launched its 5G version of its Galaxy S10 smartphone. It made South Korea the first country to commercially launch a 5G smartphone nationwide in the world. Nonetheless, the company has to consider the wave of strong competition from rivals like Huawei who are providing premium features in their smartphones and extremely affordable prices.