Samsung appears to have arrest its declining profits, despite consumer electronics still lagging behind. It’s Q4 2015 results were not very convincing, but the company has managed to marginally increase profits to 26.41 trillion KRW (about RM92 billion). Despite this, sales from its mobile communications division dipped from 111.76 trillion KRW to 103.55 trillion KRW.
Surprisingly, the weakening sales of mobile devices still manage to turn into improved operating profits for the quarter. Despite this, the full year outlook for the division was still bleak with profits dropping by a whole 4 trillion KRW (about RM 14 billion). Samsung believes that a year-end inventory adjustment and increased seasonal marketing expenses had an impact on its Q4 profits, and that affected the overall picture.
As expected, the semiconductor and components business did the most work in propping up Samsung’s year end profits. The semiconductor division saw profits increase by 50-percent. Profits in the fourth quarter slumped a little due to weakened demand across markets. Seasonal dips also affected sales of SoC and LSI, but that didn’t affect full year profits too much.
Samsung is not expecting much growth from its mobile devices division in 2016. The company says that it expects single digit growth in 2016. This should be helped by introducing addition product lines, while Samsung will continue to optimise its product portfolio.
The semiconductor business is expected to continue growing, and Samsung is expanding production of 20nm DRAM and V-NAND. It will also begin production of second generation 14nm processors for premium smartphones – even those sold by its rivals.
Samsung seems to have stabilised itself after a rough couple of years. It looks like the diversified portfolio is helping profits, especially from sales of electronics components. That being said, the company is tempering its outlook for 2016. It won’t be a great year for Samsung, but it should keep its shareholders happy for now.