Samsung forecasts steep drop in Q4 earnings

South Korea’s Samsung said on Tuesday it expected a steep drop in its operating profit for the fourth quarter of 2013, as slowing sales of high-end smartphones and a strong won hit the world’s top technology firm.

The company forecast an operating profit of $7.8 billion for October-December, down 18.3 per cent from the third quarter and 6.1 per cent lower than a year earlier.

Sales will likely reach 59 trillion won, down 0.1 per cent from the third quarter but up 5.24 per cent from a year earlier, according to earnings guidance released by the firm.

It would mark the first on-quarter drop in Samsung’s operating profit since the first three months of 2013 and would be the lowest figure since July-September 2012. It is also the first year-on-year drop in the firm’s operating profit for more than two years.

Samsung posted record net profits for the first three quarters of last year, largely fuelled by sale of smartphones. It did not disclose net profit estimates for the fourth quarter.

The latest earnings guidance showed the firm’s annual sales and operating profit for 2013 hit record highs of 228.4 trillion won and 36.7 trillion won.

Competition from budget handset makers has raised questions on Samsung’s profit sustainaibility, largely fuelled by its mobile unit.