Samsung Adopts Cautious Outlook After Record Profits

Samsung has posted its latest financial figures that reveal the South Korean tech giant enjoyed a very good Christmas indeed.

As expected, it posted a massive rise in profits, coupled with impressive revenue increases, as the popularity of its Galaxy smartphones drove performance at the conglomerate.

Impressive financials

For the fourth quarter ending 31 December, Samsung posted a net profit of 7.04 trillion South Korean won (or £4.1bn in real money). This compares to a net profit of 4.01 trillion won (£2.4bn) in the same year-ago quarter, and represents a staggering 76 percent jump in profits.

And the good news continued through to Samsung’s sales after revenues for the final quarter of 2012 rose to 56.06 trillion Korean won (£33bn). Full-year revenues reached 201.10 trillion won (£118bn).

Samsung officials can thank the stellar performance at its mobile phone division, where quarterly revenues rose to 27.23 trillion won (£16bn) thanks to the excellent sales of Samsung’s Galaxy smartphones, which continue to outsell the Apple iPhone globally.

“The success was mainly brought on by strong sales of GALAXY S III and GALAXY Note II, which beat the popularity of their predecessors with record sales in record time,” said the company in its earnings statement.

Samsung however did not reveal exact sales figures for its smartphones, but it is widely reported that many analysts believe that Samsung shipped approximately 63 million smartphones during the three months to December. It has previously admitted to selling 190,000 Galaxy SII smartphones every single day, or 500 mobile phones every minute.

In comparison Apple earlier this week revealed it had posted a quarterly net profit of $13.1 billion (£8.3bn), and had “only” shipped 47.8 million iPhones in its first quarter. This places Samsung firmly in the mobile top spot, followed by Apple.

Cautious outlook

Samsung said it managed to produce record results, despite the global difficulties at the moment.

“Despite uncertainties in Europe and concerns over the US fiscal cliff creating a difficult business environment, we did our best this quarter to achieve strong earnings based on a strategic focus on differentiated and high value-added products as well as our technological competitiveness,” said Robert Yi, senior VP and head of Investor Relations.

But looking forward, Samsung adopted a more cautious approach, warning of difficult times ahead.

“Heading into this year, we are expecting a slow recovery in the component business due to reduced capital expenditures, while competition in the set business will intensify further as demand slows and the mid- to low-end market expands,” Yi added.

He also expressed caution over the continued strength of the Korean won in 2013, which impacts Samsung financials as it relies hugely on the export market. And Samsung also sounded a word of caution about the smartphone sector in general.

“The furious growth spurt seen in the global smartphone market last year is expected to be pacified by intensifying price competition compounded by a slew of new products,” said the company in its earnings statement.

“In the first quarter, demand for smartphones in developed countries is expected to decelerate, while their emerging counterparts will see their markets escalate with the introduction of more affordable smartphones and a bigger appetite for tablet PCs throughout the year,” the company said.

Samsung believes its best growth opportunities lie in selling low-cost handsets in developing markets, a policy that both Nokia and Research in Motion have adopted over the past couple of years to stave off problems caused by heavily-saturated and economically-moribund economies in the developed world.

How much do you know about Samsung? Take our quiz.