Newsletter
Samsung endured a poor financial year in 2023, primarily due to losses from the semiconductor division, which has been its cash cow for the past several years. The division posted its first losses in 14 years, leading to a steep decline in the company’s profits. Thankfully, the year ended on a more positive note. Samsung recently reported its earnings guidance for Q4 2023 and the picture looks brighter than before.
Samsung saw its profit margin grow in Q4 2023 over Q3
In the first two quarters of 2023, Samsung made a profit of only KRW 640 billion (roughly $486 million) and KRW 670 billion (roughly $508 million), respectively. The profit declined over 95% year-on-year (YoY) compared to the same period in 2022. This isn’t because the company struggled to sell products. Its consolidated sales revenue for the two quarters was down about 20% from the previous year.
However, massive semiconductor losses mean its overall profit margin in the first half of 2023 was just 1%, down from 18% in 2022. In the third quarter, Samsung showed signs of recovery with a profit margin of 3.6%. It reported a revenue of KRW 67.40 trillion (roughly $51 billion) and a profit of KRW 2.43 trillion (roughly $1.8 billion). The margin was still substantially lower than Q3 2022 (14%) but better than the first two quarters of 2023.
For the year-ending quarter, Samsung estimated its revenue at KRW 67 trillion (roughly $51 billion) and operating profit at KRW 2.8 trillion (roughly $2.1 billion). The revenue is down just 5% YoY from Q4 2022 but the profit is still down 35%. However, when we look at the profit margin, we see Samsung has improved the margin to almost 4.2%. It was 6.1% in the final quarter of 2022.
The Korean behemoth will share the full earnings report for Q4 and full-year 2023 later this month. The report will include a breakdown of the financial performance of each business division. Our calculations reveal its total revenue for the year was KRW 258 trillion, down 14% from KRW 302 trillion in 2022. The operating profit was KRW 6.54 trillion, a whopping 85% drop from KRW 43.38 trillion in the previous year. The profit margin in 2022 was 13.5%, while it was just 25% in 2023.
Samsung expects the Galaxy S24 series to contribute more to its earnings
Samsung may have been the world’s largest smartphone company for the past several years, but the smartphone division doesn’t make a massive amount of money for the company. This is because it has always failed to challenge Apple in the flagship segment, where profit margins are high. The Korean firm expects the Galaxy S24 series, which launches on January 17, to do better than the Galaxy S23 and contribute more to its earnings. It remains to be seen whether Samsung hits its target.