Samsung announces 25% drop in profits

South Korean electronics firm Samsung has announced a 25% drop in yearly profits as well as its first-ever quarterly loss. The group has been hit hard by a slump in global demand as well as the fall in prices for flat panels and memory chips.


AFP - South Korea's Samsung Electronics Friday announced its first-ever quarterly loss, due to a sharp fall in the prices of memory chips and flat panels amid slumping demand.

The world's largest memory chip maker said it lost 20 billion won (14.4 million dollars) in October-December last year, compared with a net profit of 2.21 trillion won a year earlier and a net profit of 1.22 trillion won in the third quarter of 2008.

In the fourth quarter it swung to an operating loss of 940 billion won from an operating profit of 1.78 trillion won a year earlier, while sales were at 18.45 trillion won from 17.48 trillion a year earlier.

For the full year Samsung Electronics reported a net profit drop of 25 percent to 5.53 trillion won from 7.43 trillion won in 2007.

"The global economic slowdown had an adverse effect on consumer purchases of electronics goods in the fourth quarter, traditionally a strong period for electronics companies," the company said in a statement.

Samsung Electronics, the flagship of South Korea's biggest business group, has never posted operating or net losses since it started announcing quarterly earnings results in 2000.

It forecast sluggish market growth in the semiconductor and display sectors for the first quarter of this year as spending contracts worldwide.

However, it said its telecom business is expected to perform strongly this year despite slower market conditions in the first quarter.

Robert Yi, head of Samsung's investor relations team, told a press conference it will be difficult to report a net profit in the first quarter, when demand for electronics goods is in any case traditionally weak.

"Given the current market conditions, a turnaround in the first quarter would be difficult," Yonhap news agency quoted him as saying.

The company's shares closed down 4.1 percent at 442,000 won, prompting a 2.1 percent fall in the overall market.

The company, which employs around 150,000 people in 62 countries, has announced its biggest-ever reshuffle to counter the recession.

It has appointed new bosses at five of its eight regional headquarters overseas. In Korea, more than 80 percent of the 1,200 staff at the Seoul headquarters have been posted to local production or marketing units.

The four key business divisions -- semiconductors, liquid crystal displays, mobile phones and consumer electronics -- have been consolidated into two major divisions.

The Samsung group has promoted or replaced 25 chief executives, cut executive pay by 20 percent and slashed other benefits.

The overall group accounts for about 20 percent of South Korea's annual exports.

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