Samsung posts grim Q4 2013 earnings estimate

Samsung has just published the preliminary earnings guidance, which should allow investors and journalists an early look into the financial performance of the company during the last calendar quarter of 2013.

The Q4 operating profit was supposedly around 8.3 trillion won ($7.79 billion). This represents a 6%YoY decrease and 18% QoQ decrease - overall, far from a stellar result. And things look even worse when you consider it's a holiday quarter we are talking about.

The decrease in operating profit is even more surprising given the fact that the estimated consolidated earnings revenue rose by 5% on a YoY basis. The estimated total sale revenue in Q4 2013 was around 59 trillion won. That's slightly lower than the 61 trillion industry analysts expected (even after their recent expectation downgrading).

The Samsung Mobile division accounts for two thirds of the group's revenue, so increased expenses there may very well be to blame for the indicated subpar performance.

"Even taking into account one-off costs, the (fourth-quarter) profit is lower than expected. Samsung has not provided details, but smartphone profit may have fared worse than expected, given increased marketing expenses," said IBK Investment & Securities analyst Lee Seung-woo.

Analysts consider that the bottom line was likely hurt to an extent by the substantial bonus expenditures to its Korean and overseas branches. Those are a one-off expenditure which comes as a commemoration of the 20 year mark since the start of Chairman Lee Kun-hee's "New Management" strategy to put the company at the top of the global electronics market.

Lee took over the TV set company in 1987 from his father (the founder) and in 1993 set out to achieve global technology dominance.

As Reuters report, it's a common practice among Korean companies to pay lower salaries and add various bonuses, depending on the unit performance.

In the past two weeks the company shares have taken a 10% dip, accounting for a market cap loss of around $19 billion.

The company has announced that we should expect the finalized fourth quarter report on January 24, 2014.

Source | Via