Samsung Electronics on Thursday posted bigger-than-expected decline in its profits for the December quarter amid a tough business environment. Samsung's net profit for the fourth quarter plunged 40 per cent from a year earlier to 3.2 trillion won ($2.7 billion or roughly Rs. 18,394 crores). The company follows a January-December fiscal year.The South Korean company also warned that the recovery in its profits in the first half of this year seem dismal. Here are the factors affecting the company's revenues negatively:
•Weak global demand for consumer electronics.
•Increased competition in the budget and medium-range smartphones.
•It is struggling to increase the sales of its premium smartphones. Even though Samsung rolled out its high-end smartphones sooner than usual, including the Galaxy Edge series with curved displays, they failed to increase premium smartphone shipments as consumers flocked to cheaper smartphones. Apple, too, which reported its earnings this week, forecast its first sales decline in 13 years.
•South Korea's free-floating exchange rate may impact revenues negatively and present challenges in specific regions.
•Samsung, the world's largest maker of memory chips used in PCs and mobile devices, has had weak profit growth driven by an over-supply of memory chips.
•Robert Yi, a senior vice president at Samsung, said that it would be a challenge to maintain the 2015 operating profit level as weak macroeconomic conditions and low IT demand are expected to persist during the first half of 2016.
•Slowing economic growth in China seems to be hurting the sales of electronics.
•Weaker emerging market currencies also seem to be undercutting sales ranging from personal computers to television sets.