Samsung enters emergency mode over falling euro

Samsung enters emergency mode over falling euro

Summary: South Korean electronics giant shifts into emergency mode first time since 2008 financial crisis, to cope with fallout from worsening eurozone economic crisis, report states.


Samsung Electronics has entered emergency mode to better deal with the deepening economic crisis over the eurozone, according to the Korea Times.

In a report Wednesday, the news daily noted that this was the first time in four years that Samsung has declared a need for "crisis management" since the company started the scheme in late 2008 during the financial crisis. It had then reported an operating loss during the fourth quarter that year of 800 billion won (US$704 million).

At a briefing at the firm's headquarters, Rhee In-yong, a communications officer with Samsung, said that the main reason behind the move was the "highly-fluctuating currency".

"The euro is rapidly losing its currency value. Samsung Electronics is currently being run by scenario-based management as the eurozone is one of its biggest markets,’’ said Rhee, in the article.

Worries over the eurozone have seen its currency weaken over the past year. The euro, against the US dollar, is currently trading at around $1.25, down from $1.45 last July. This means Samsung's overseas earnings are hit when translated back to its home currency, especially with Europe one of its key markets.

However, Samsung noted that the current situation was "looking somewhat better than 2008" because it was seeing an increase of quarterly profit overall, the Korea Times said.

It added that "not all affiliates are operating crisis management systems as their key markets are different. Affiliates are responding to their own interests," according to the executive.

Samsung is expected to announce an operating profit boost in its second quarter, mainly from its handsets business. It is forecast to post around US$6.15 billion in earnings for the three months ended June.

Topics: Tech Industry, Samsung


Loves caption contests, leisurely strolls along supermarket aisles and watching How It's Made. Ryan has covered finance, politics, tech and sports for TV, radio and print. He is also co-author of best seller "Profit from the Panic". Ryan is an editor at ZDNet's Asia/Singapore office.

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  • Pay where you eat

    If Samsung is worried about this, it's because they don't have enough factories and offices in the Eurozone. If they had a bunch of employees they had to pay in Euros, they wouldn't worry about accumulating Euros by selling in Europe.
    Robert Hahn
  • "Highly fluctuating currency"

    Yeah, I'm not sure this is really about pinning this all on the Eurozone - the economic conditions are certainly unsettled, but does a few percent variation in exchange rates merit "crisis management"?

    I wonder if some of the "crisis" isn't 1) recent setbacks in the patent wars, particularly those resulting in import/sales bans of Galaxy tablets and the like in the US - probably still their biggest sales market...and 2) the increasing possibility of also losing one of their biggest component buyers, as Apple identifies and moves toward alternate vendors such as Sharp and others, in the face of continued intransigence on the part of Samsung and its Android-powered knock-offs.