A number of the conglomerate’s divisions missed quarterly targets but the recent launch of the Galaxy S21 is expected to turn the tide.
Revenues and profits rose at Samsung in 2020, but were slightly off the mark after a tumultuous year.
It booked revenues of KRW 236.81trn ($211.7bn) in 2020 with an operating profit of KRW 35.99trn ($32.1bn), even with “sluggish consumer products sales” in the third quarter.
The company missed some of its revenue and profit targets in the fourth quarter. Its consumer electronics division reported a drop in profits in the final three months of the year and its memory business also saw earnings decline owing to a fall in chip prices and spikes in production costs as well as currency fluctuations.
Its mobile communications business, which includes its smartphones, marked a decline in profits last quarter due to weaker-than-expected sales and higher marketing costs. It noted that its networks business, where it is rolling out 5G infrastructure, is performing well, at the expense of curtailed Huawei.
Looking ahead, Samsung said it expects “overall profit to weaken in the first quarter of 2021”.
The company’s mobile division took a hit in the final months of 2020 as competitors, namely Apple, launched new smartphones. Samsung launched its Galaxy S21 smartphone earlier this month after a year where retail sales slumped thanks to the pandemic.
In its 2021 outlook, it said it expects to increase smartphone sales by meeting demand for 5G devices as people update their handsets.
“The mobile communications business is set to see robust sales of flagship smartphones such as the Galaxy S21 and new mass market models,” the company said. “The consumer electronics division will likely post stable results despite weakness in seasonal demand, underpinned by new product launches and introduction of new premium line-ups.”
The Korean giant added that it was able to sustain supply chains during the worst stages of the pandemic but warned of recurring waves of Covid-19 disrupting supply again.
2021 will likely be a challenging year for Samsung as it grapples with the imprisonment of its leader. Vice-president of the company and heir to the family business, Lee Jae Yong, who ran Samsung as his father had been ill for some time and died in 2020, was recently sentenced to two years and six months in prison for corruption and bribery.
Lee was wrapped up in a bribery scandal involving former South Korean president Park Geun-hye that has been unravelling in recent years. His imprisonment leaves a leadership vacuum at the conglomerate. He has opted not to appeal the verdict.