SEOUL: Samsung reported its smallest quarterly profit in nearly three years yesterday as its key smartphone business faltered under competition from Apple’s iPhone6 and Chinese handset makers in an increasingly saturated market.
Net profit for the South Korean electronics giant amounted to 4.22 trillion won ($4bn) for July to September, marking a dramatic fall of 48.8 percent from a year ago, and the lowest figure since the fourth quarter of 2011.
Operating profit also dropped 60 percent from a year ago to 4.06 trillion won, while sales tumbled about 20 percent to 47.4 trillion won, Samsung said in a statement. The firm’s mobile phone unit reported operating profit of 1.75 trillion won in the third quarter, a dramatic decline from 6.7 trillion won a year ago.
Samsung has a diverse product line ranging from memory chips to home appliances, but it’s the mobile division that had driven the company’s record profit surge of recent years. The current slump was starkly reflected in the fact that the mobile unit’s operating profit in the third quarter accounted for 43 percent of the company’s total, compared to 76 percent just six months ago. Despite a slight increase in unit sales volume, actual sales revenue tumbled to 24.6 trillion won from 36.6 trillion won.
The third-quarter performance by the world’s largest manufacturer of smartphones and televisions followed a 20 percent drop in profit in the second quarter. Despite the slump, Samsung’s share price closed 4.51 percent higher at 1.18 million won on expectations of potential dividend payout.
The latest edition of Samsung’s previously all-conquering Galaxy S smartphone met with a lukewarm response on its launch in April. It was also forced to introduce the new edition of the oversized smartphone Galaxy Note earlier than scheduled in September as the latest iPhone6 from US rival Apple enjoyed better-than-expected demand.
Samsung initially pioneered the market for “phablet” devices — sized between a smartphone and a tablet computer—when it introduced the Galaxy Note series in 2011. But the firm has come under pressure with the release of the iPhone 6 Plus, which also boasts a large screen.
And in the low- to mid-range smartphone segment, Samsung has faced a growing challenge from Chinese firms nipping at its heels in key emerging markets including China. Samsung saw its leading share in the global smartphone market slip to 25.2 percent in the second quarter of this year from 32.6 percent a year ago.
Kingdom Holding Q3 net profit rises
Saudi Arabia’s Kingdom Holding, the investment firm owned by billionaire Prince Alwaleed bin Talal, posted a 20.5 percent rise in third-quarter net profit yesterday, on the back of higher investment profits. Kingdom made a net profit of SR265m ($70.6m) in the three months ended September 30, compared to SR219.9m in the same period a year earlier, it said in a bourse statement. It attributed the rise to an increase in profits from investments and to lower finance charges. The investment firm has minority stakes in some of the world’s top companies. Aside from being one of the largest shareholders in Citigroup, it owns stakes in Rupert Murdoch’s News Corp and microblogging site Twitter.
Emaar net up 55pc
Dubai’s Emaar Malls Group (EMG), a unit of Emaar Properties that listed on the emirate’s main stock market in October, reported a 55.2 percent jump in third-quarter net profit yesterday as revenues rose. The retail and malls unit of Dubai’s largest developer made a quarterly profit of Dh321.18m ($87.5m), up from Dh206.97m in the corresponding period of 2013. Quarterly revenue was Dh649.88m versus Dh542.74m a year ago. EMG priced the largest stock flotation in the Gulf region since 2008 at the end of September, raising Dh5.8bn from the sale of 15.4 percent of the company. In a separate Emaar Properties statement, the developer said it will hold a shareholder meeting on November 24 in which a proposal to distribute the cash dividend, equivalent to Dh1.27 per share, would be discussed.
Fujitsu net surges
Fujitsu said yesterday its half-year net profit jumped by nearly a third on rising IT investment among Japanese firms, but a recent economic downturn took a toll on results in July-September. The sprawling IT conglomerate logged an April-September net profit of 24.1bn yen ($221m), up 31.5 percent year on year, while sales rose 1.9 percent to 2.19 trillion yen. “Against the backdrop of improved corporate earnings, investment in information and communication technology continues to expand at a moderate pace,” Fujitsu said in a statement. Fujitsu left its full-year outlook unchanged at a net profit of 125bn yen on sales of 4.8 trillion yen.
Toshiba profit up
Toshiba said yesterday that its half-year net profit soared about 43 percent from a year ago, largely owing to a weak yen and strong sales in its infrastructure business. The company said it earned 30.8bn yen ($282m) in the six months to September on sales of 3.11 trillion yen, up 3.6 percent. For the year to March next year, Toshiba left its forecasts unchanged, expecting a net profit of 120bn yen on sales of 6.7 trillion yen. A sharply weaker yen has helped major Japanese exporters by making them more competitive overseas and inflating repatriated profits. Toshiba is involved in a range of businesses from power generation, transmission systems and medical equipment to computer chips and laptops. Despite the upbeat results, the company pointed to weakness in its TV and consumer goods businesses.
Robust Q3 for VW
Volkswagen, Europe’s biggest car maker, said that it is sticking to its full-year profit targets following a strong rise in profits in the third quarter. “The Volkswagen group reported a robust performance in the first nine months of 2014, despite the ongoing uncertain market environment,” said Chief Executive Martin Winterkorn. Volkswagen said its net profit jumped by 57.7 percent to ¤2.928bn ($3.7bn) in the period from July to September. Underlying or operating profit rose by 16.3 percent to ¤3.23bn euros on a 4.1-percent rise in sales to ¤48.91bn.
Lufthansa profit up
Lufthansa, Europe’s biggest airline, yesterday cut its profit forecast for 2015 in face of the global economic slowdown. “When we look ahead, we can see that the economic slowdown and the continuing declines in our passenger yields in the face of fierce competition will affect our operating scope in the year ahead,” said Chief Executive Carsten Spohr. The airline has been hit by industrial action by its pilots, who have staged nine walk-outs since April over plans to raise the age at which they are able to take early retirement. The last stoppage was a two-day strike last week. In the third quarter alone, Lufthansa said it booked a 24.7-percent rise in net profit to ¤561m. Operating profit was up 24.6 percent at ¤735m and revenues edged up by 1.9 percent to ¤8.458bn in the July-September, Lufthansa said.
Strong Q3 for Bayer
German chemicals and pharmaceuticals giant Bayer, maker of Aspirin, said that it is raising its full-year profit targets after a strong third quarter. “The strong upward trend in the life science businesses — healthcase and crop science — persisted in the third quarter,” said Chief Executive Marijn Dekkers. In the three months to September alone, Bayer booked net profit of ¤826m ($1.04bn), an increase of 12.7 percent over the year-earlier figure. Operating profit also increased by 12.7 percent to ¤1.376bn on a 5.6-percent rise in revenues to ¤10.187bn, Bayer said.
ANA soars 78pc
Japan’s All Nippon Airways (ANA) said yesterday that its half-year net profit soared 78 percent as an expansion of one of Tokyo’s airports boosted the carrier’s international business. The airline earned 35.77bn yen ($328m) against a 20.07bn net profit a year earlier, while April-September sales rose 9.1 percent to 854.82bn yen, it said. A sharp decline in the yen has sent the price of fuel — often an airline’s single-biggest expense — surging for ANA. Operating profit for the first half year rose 33 percent to 57.94bn yen, ANA said.
NEC rebounds
Japan IT firm NEC said yesterday that it had swung back to profitability in the six months to September, after it exited from the smartphone market as part of a broader restructuring. The firm posted a net profit of 12.5bn yen ($114m) in the April-September period, reversing a 26.2bn yen loss a year earlier. Operating profit ballooned to 21.5bn yen from a year-earlier profit of 379m yen, as the firm cut away its money-losing smartphone unit and focused on conventional handsets. Sales were down 4.2 percent at 1.32 trillion yen, it added.
Eni profit rises
Italy’s oil and gas giant Eni achieved a 2.5-percent rise in net profit in the third quarter, it said despite a drop in production and falling oil prices. Thanks to a lower tax rate, the company’s three-month profits after adjustment for special factors were 1.17bn euros ($1.47bn), beating analysts expectation of ¤860m. Operating profit on a 12-month comparison dropped 11.8 percent to ¤3.03bn, hit by a slump in oil prices on the back of weaker global demand, Eni said. Eni also said that it had made an “important discovery” in an area off the coast of Congo, which would produce up to 1bn barrels of oil equivalent.
Hyundai Heavy in loss
South Korean shipbuilder Hyundai Heavy Industries reported a record net loss in the third quarter, reflecting delayed construction projects and competition from Chinese rivals. The company said its consolidated net loss for July to September stood at 1.46 trillion won ($1.4bn) from 12.5bn won a year ago. It also posted a record operating loss of 1.93 trillion won in the third quarter, compared to a profit of 222.4bn won a year earlier. Sales fell 5.6 percent to 12.4 trillion won. The company attributed the loss mainly to large provisions made against delayed projects. It promised to restructure its business or sell unprofitable businesses to cut costs and improve profitability. South Korean shipbuilders have been hit by a global economic slowdown and growing competition from Chinese rivals over the past several years.
Novo Nordisk sales up
The world’s top insulin maker, Denmark’s Novo Nordisk, reported a slight profit increase in the third quarter as sales rose. Novo Nordisk accounts for almost half of the global insulin market, which has grown rapidly in recent years following a rise in the number of people suffering from diabetes. The World Health Organisation estimates that the number of people with diabetes totals nearly 350 million. Net profit grew by 1.3 percent to 6.5bn kroner ($1.1bn) while revenue rose by 8.5 percent to 22.249bn kroner. In local currencies, sales increased by 8.0 percent from January to September, thanks to strong sales of modern insulin and non-insulin compound Victoza. He added that the approval of insulin drug combination treatment Xultophy in Europe meant the company expected to launch the product in the first half of 2015. Diabetes treatments represent 88 percent of Novo Nordisk’s revenue, but the company also provides haemophilia care, growth hormone therapy and hormone replacement therapy.
Agencies
