Samsung Q4 profits climb 26% to $5.3bn

The South Korean company's fourth quarter sales rose 2.8%

Samsung expects overall profit to weaken in the first quarter of 2021, but overall performance to return to pre-Covid levels for the year. EPA

Samsung Electronics' fourth quarter net profit jumped 26.4 per cent year-on-year as the company increased its efforts to ensure a stable supply chain despite coronavirus-related disruptions.

The net profit of the world's biggest smartphone and memory chip maker in the three months to December 31 climbed to 6.6 trillion Korean won ($5.3 billion). However, it was down almost 30 per cent from the previous three month period.

The South Korean company said it the quarterly decline was due to "weaker memory prices and sluggish consumer products sales", as well as "higher marketing costs and negative impact from the Korean won's appreciation".

In the last quarter, the local currency’s value rose sharply against the US dollar, euro and key emerging market currencies. This resulted in a negative impact equivalent to about 1.4tn won compared with the third quarter, mostly in semiconductor and display businesses.

Samsung's fourth quarter sales rose an annual 2.8 per cent to 61.6tn won. However, sales were down more than 8 per cent from the prior quarter.

Looking ahead, the company expects overall profit to weaken in the first three months of 2021.

"The memory business will likely continue to be affected by the ongoing strength in the won and costs associated with new production lines … despite solid demand from mobile products and data centres," the company said.

It expects a recovery in overall global demand in 2021 but uncertainties persist over the possibility of recurring Covid-19 waves, it added.

Samsung’s capital expenditure was 38.5tn won last year - of which 32.9tn won spent on semiconductors and 3.9tn on displays. It also increased investment for displays and new mobile screen technologies.

The company expects market demand for smartphones and tablets to decline in the first quarter of this year. However, it plans to strengthen its market position through the latest Galaxy S21 series and the expansion of the foldable category including the Galaxy Z Fold and Galaxy Z Flip.

"In 2021, market demand is likely to recover to pre-Covid levels backed by [the] gradual recovery in the economy and accelerating expansion of the 5G market," it said.