Samsung Warns Investors as Revenues and Profits Slump

Samsung-LogoSamsung has issued a warning to investors that both revenues and operating profit for the 2014 saw sharp drops from the previous year.

The company has announced it expects sales of between ?51 trillion to ?53 trillion (£30-32bn), a drop of 12 per cent on last year, and profit of ?5 trillion to ?5.4 trillion (£3-3.2bn), a decrease of around 37 per cent on 2013s figures.

The slump represents the first annual fall in profits for the company since 2011, although a slight boost in Q4 suggests that earnings may have at least stabilised in the short term, as the company continues to move away from its traditional markets and reposition itself as a connected device and wearables firm.

“A large part of the decline in figures has been poor performance in markets like China, where it is under increased competition and pressure from local brands like Xiaomi and OnePlus that are producing high-end devices for a fraction of the cost to the consumer,” said Marco Veremis, CEO of mobile monetisation firm Upstream.

“The battle is certainly not lost for Samsung. There is still an appetite for these top of the line devices in China, as research we conducted with Ovum reveals Samsung is the second most recognised Western brand in China and 32 per cent of consumers aspire to make their next device a Samsung product.

“However, 85 per cent of Chinese consumers choose mobile content predominantly because it is familiar and easy to understand, something many global companies often struggle with and comes much more naturally to local brands.”