Samsung Elec profit guidance misses expectations as won weighs

Samsung Elec profit guidance misses expectations as won weighs”

Samsung Electronics Co Ltd 005930.KS said it would likely rake in a record fourth-quarter profit but the guidance fell short of consensus estimate, spooking investors already anxious that a memory chip boom could be ending sooner rather than later.

Still, rising demand for organic light-emitting diode screens helped to fuel a rise in sales to 66 trillion won in the quarter, compared with the 67.6 trillion won analysts expected.

For the October-December period of previous year, the estimated operating profit of the Korean company is at 366.8 billion won, which is about $343 million.

Samsung's operating profit to sales ratio also hit a record high 22-point-four percent past year. However, two analysts said a strong won and a year-end bonus for staff in the semiconductor business likely dented the South Korean firm's quarterly profit by about 400 billion won and 400-500 billion won, respectively.

The results were below analysts' expectations.

South Korea's government this month warned about the rise in the won and said it will take steps in the case of one-sided moves in the nation's currency.

Samsung Electronics Co reported lower-than-projected profit as it lost momentum in memory chips and faced a strengthening South Korean won.

The Apple Inc smartphone rival did not elaborate on its October-December performance and will disclose detailed results at the end of January.

What drove Samsung's monstrous year was the company's semiconductor division, which has been cashing in on the skyrocketing demand and prices of memory chips.

Samsung's shares hit record highs in 2017 before sliding in November after Morgan Stanley downgraded the stock citing an expected peak in the memory chips cycle and a slowdown in smartphones.

Some analysts however worry the price of chips may fall this year and weigh on Samsung's earnings while others remain bullish on Samsung that a possible fall in chip prices would be outweighed by a big increase in sales.

The stellar financial achievement, thanks to the surge in prices of memory chips, has coincided with Samsung's management crisis. Its de facto leader Lee Jae-yong, a grandson of Samsung's founder and the only son of the ailing Samsung chair, is fighting at an appeals court to overturn his five-year prison sentence for bribery and other charges.

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