The technology giant – Samsung Electronics on Thursday warned of a possible decline in profits in 2016 due to a fall in sales of smart phones and other gadgets, which also affected its competitors, in particular Apple (O: AAPL), and the largest manufacturer of chips.
Disappointing forecasts of the South Korean company came out the next day after Apple reported that is waiting for the first decline in revenue in the past 13 years, prompting its shares to fall by more than 6.5 %.
Slowing economic growth in China and weaker emerging market currencies caused a decline in sales of electronics, which has led to problems not only for Samsung and Apple, but also for the suppliers and the entire sector.
"Weak demand for IT will reduce the ability to maintain profits in 2016 at the level of previous years", - says the Samsung report. The company also reported that "the tense business conditions" remain during the quarter and the first half of 2016.
Samsung's operating profit in October-December amounted to 6.1 trillion won ($ 5.05 billion), in line with expectations. Revenue rose 1.1 % to 53.3 trillion won, slightly surpassing the forecast of 53 trillion won.
Operating profit for 2015 amounted to 26.4 trillion won against 25 trillion won a year earlier.
The main source of income for the sixth consecutive quarter is the unit of semiconductors. In annual terms, earnings in this segment jumped to 2.80 trillion won from 2.70 trillion.
At the same time profit of Mobile Phones decreased by 7.3 % compared to the previous quarter to 2.23 trillion won, showing the weakest result for four quarters. The company expects revenue growth of small units in the first quarter due to the release of new smartphones, although shipments of smart phones may be slightly reduced.