SEOUL (AFP) – Samsung reported its smallest quarterly profit in nearly three years Thursday as its key smartphone business faltered under competition from Apple’s iPhone6 and Chinese handset makers in an increasingly saturated market.
Net profit for the South Korean electronics giant amounted to 4.22 trillion won ($4 billion) for July to September, marking a dramatic fall of 48.8 per cent from a year ago, and the lowest figure since the fourth quarter of 2011.
Operating profit also dropped 60 per cent from a year ago to 4.06 trillion won, while sales tumbled about 20 per cent to 47.4 trillion won, Samsung said in a statement.
The firm’s mobile phone unit reported operating profit of 1.75 trillion won in the third quarter, a dramatic decline from 6.7 trillion won a year ago.
Samsung has a diverse product line ranging from memory chips to home appliances, but it’s the mobile division that had driven the company’s record profit surge of recent years.
The current slump was starkly reflected in the fact that the mobile unit’s operating profit in the third quarter accounted for 43 per cent of the company’s total, compared to 76 per cent just six months ago.
Despite a slight increase in unit sales volume, actual sales revenue tumbled to 24.6 trillion won from 36.6 trillion won.
“The average selling price of smartphones declined due to an increased share of middle- to low-end smartphone sales and price reductions of existing smartphone models,” the company said.
The third-quarter performance by the world’s largest manufacturer of smartphones and televisions followed a 20 per cent drop in profit in the second quarter.
Despite the slump, Samsung’s share price closed 4.51 per cent higher Thursday at 1.18 million won on expectations of potential dividend payout.
Robert Yi, Samsung’s head of investor relations, said the firm was considering some form of “shareholder return” next year and would make a final announcement in the fourth quarter.
The latest edition of Samsung’s previously all-conquering Galaxy S smartphone met with a lukewarm response on its launch in April.