Samsung warns of difficult financial year to come

The South Korean giant says that low growth is a cause for concern over the coming financial year.
Written by Charlie Osborne, Contributing Writer

Samsung has warned staff that the firm expects a difficult business environment in 2016 amid growing concerns of the tech giant's financial health and slowing sales.

As reported by Reuters, Chief Executive Kwon Oh-hyun told employees at a New Year address that low global growth patterns are expected to continue throughout 2016, which may be compounded by uncertainty and risk factors associated with emerging markets in developing countries.

While the Samsung executive did not disclose any specific figures or forecasts, there is also greater competition against the firm's main businesses -- consumer electronics, television sets and chip production -- which may also block the South Korean company's wishes for expansion.

"The territories of industries are collapsing," Kwon said. "We have to compete in a new way that we've never experienced in the past."

In Q3 FY2015, Samsung bounced back to profit after seven quarters of poor results but still failed to meet in-company forecasts. The company reported a net profit of 5.46 trillion won ($4.8 billion) for Q3, up 29.4 percent year-on-year, but down 5 percent quarter-on-quarter from the second quarter.

Samsung attributed the firm's profit results to strong smartphone sales, but rivals including Apple and low-end Chinese smartphone makers remain a thorn in Samsung's side.

According to research firm IDC, Samsung's main profit driver in the smartphone space is now low-end budget devices, while Apple, Huawei and Lenovo are focused on mid- to high-range products.

In December, reports surfaced suggesting that Samsung may cut back its smartphone production and shipment by up to 12 percent over the coming year as a response to these market changes.

Samsung is expected to issue earnings guidance for Q4 FY2015 on Friday, but has already admitted figures are expected to be lower than the third quarter due to weak component demand.

Samsung shares have steadily declined over the last financial year and have dropped by 4.37 percent at the time of writing.

Despite an uncertain future, Samsung is still carving its place in next-generation fields in the hope of forming a strong position in future businesses. At the end of December, Samsung revealed a smart bio-processor for use in the health and wearables industry. The processor has been designed for gadgets which track daily fitness, temperature, health and stress levels.

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