Samsung predicts drop in profits

The share price of Samsung Electronics slipped slightly today (April 8th) after the company warned it expects profits to be down for the second quarter in succession.

Samsung, which is one of the biggest manufacturers of smartphones and televisions in the world, stated that the firm is expecting to record an operating profit of 8.4 trillion won (£4.8 billion) for the January-to-March quarter.

This would be a four per cent drop on the same period in 2013 and also a six per cent fall on the results announced by the company for the final quarter last year.

Greg Roh, an analyst with HMC Investment and Securities, stated that Samsung needs to focus on cost reduction and reducing marketing costs over the course of 2014.

He said: "In some sense, Samsung has no way to prevent a decline in its earnings without improving internal efficiencies."

Market competition

Samsung's market share has been eroded in the last couple of years as a result of the growth of Chinese manufacturers such as Lenovo, ZTE and Huawei in recent months, while Apple and HTC have also been imposing themselves harder on the sector.

It was noted by Samsung recently that competition in the key smartphone market is likely to "intensify" even further in the near future as more companies become determined to take a slice of the profitable pie.

Samsung's Galaxy series is one of the top-selling smartphone brands of the last few years, with the firm going head-to-head with Apple, which has sold a huge amount of iPhones. However, companies such as Google have made their entrance into the sector in recent years as well and the company has enjoyed success with the launch of its Nexus phones and tablet computers.

Investors did not panic on the back of the profit warning issued by Samsung, though the share price of the company was slightly down on the start of the day. By the close of the session, stocks in the firm were 0.21 per cent lower for the session.

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