In its earnings guidance, Samsung has estimated a consolidated sales revenue of about Korean won (KRW) 76 trillion (approx. $53.9 billion) between July to September this year. That’s a 2.7 percent increase in quarterly revenue from the same period a year ago when it generated KRW 73.98 trillion. However, rising manufacturing costs and dwindling profit margins mean the profitability has decreased sharply. The company is expecting to make KRW 10.8 trillion (~$7.7 billion) in Q3 2022. That marks a massive 31.7 percent annual decline in profits, having made KRW 15.82 trillion in the third quarter last year.
Samsung suffers a massive decline in profit in Q3 2022
This is Samsung’s first YoY profit decline in almost three years, since the first quarter of 2020. The estimated operating profit for this past quarter is also the company’s lowest since Q1 2021. The Korean firm hasn’t broken down its earnings for Q3 2022 yet. It will do that in the full earnings report later this month. But analysts suggest Samsung’s profits have taken a hit because of a dip in semiconductor sales. Electronics haven’t brought in much profit either. The semiconductor business is one of Samsung’s cash cows, particularly memory chips. It is the world’s largest vendor of memory solutions. During the coronavirus pandemic (2020 and 2021), demand for memory chips reached a new peak as everything went remote, requiring more servers and storage solutions. This also created a global semiconductor shortage, leading to higher prices, and effectively, higher profit margins. But clients have gone conservative in recent months amid global economic uncertainty. Additionally, the semiconductor shortage started waning and the prices came down. All of these developments have affected Samsung’s profitability in the semiconductor business. Moreover, the smartphone business hasn’t been doing too well either. The company was hoping the Galaxy Z Fold 4 and Galaxy Z Flip 4 to sell in huge numbers. But early reports suggest it will fall short of its target by a huge margin. As said earlier, Samsung will follow up this earnings guidance with the full earnings report for Q3 2022 towards the end of this month. The report should break down the financial performance of all its business divisions. The company will also provide its outlook for the next quarter. We will let you know as and when we have the full report.
