Samsung’s position as the world’s leading smart phone manufacturer looked increasingly perilous today after the company posted its slowest profit growth since 2011.
The Korean giant’s Q4 financials revealed a drop in profits of 11 per cent from the previous three months – its first quarterly decline in two years.
Samsung said net profits stood at £4bn for the fourth quarter, while operating profit was £5.6bn, down from £6bn the year previously and down 18 per cent from Q3 2013.
Particularly disappointing was Samsung’s cash cow mobile division which recorded operating profit of £3.7bn, down 18 per cent from the previous quarter.
Asia’s biggest technology company is said to be feeling the squeeze from new iPhones entering the market and the introduction of cheaper devices made by Lenovo Group and Huawei Technologies which have threatened the growth of Samsung’s Galaxy devices.
It has also been reported that Samsung, which gets more than 80 percent of sales from outside its home market, has been hit by the rising South Korean currency, which cuts the value of overseas sales. The company also made bonus payments to workers and boosted marketing as it prepares to release its new S5 high-end device to battle Apple.
For 2014, Samsung expects competition to intensify in the feature phone market, as the migration to smartphones accelerates. The smartphone market will be driven by the transition to LTE in Europe and China and demand from emerging markets, and the company plans new mid-range and high-end products to target these areas. Rapid growth is also expected to continue in the tablet market, although Samsung expects both phones and tablets to be weaker in Q1 due to the usual seasonal slowdown.
Samsung’s mobile business executive vice president Lee Young Hee (pictured) said the company plans to release the Galaxy S5 by April, pairing it with the successor to its Gear smartwatch.
Samsung is counting on new features to spark sales after its predecessor, the S4, fell short of analyst expectations amid competition from Chinese makers bringing out smartphones costing as little as $100.