Samsung is on track to record its lowest quarterly profit since the first quarter of 2009, the company has said. Last year during the second quarter, the company reported operating profits of 14.1 trillion Korean won but for the same period this year, the company’s guidance believes this will drop to 600 billion Korean won, a 96% drop.
According to CNBC, if the figure ends up coming true, it’ll mark the lowest quarterly profit the company has seen since the first quarter of 2009. During Q1 2009, the company recorded operating profits of just 590 billion won, which is a bit lower than the current guidance.
While profits are expected to fall sharply, Samsung says it expects to see a fall in revenue in the second quarter compared to a year ago. In Q2 last year, it recorded 77.2 trillion won in revenue but this year that’s expected to fall to 63.75 trillion won, a decline of 17.4%. We will have to wait until July 27 for the official earnings report to see if the actual figures diverge from the guidance.
Samsung’s significant fall in profits is being blamed on the weak demand for memory chips. The analyst firm Gartner reported in April that there was an oversupply of semiconductors in inventories which has pushed prices down and reduced demand for new supplies.
Samsung already responded to the oversupply in April by cutting back production, so that should help the company somewhat. In its analysis, Gartner believed at the time that things in the sector could start to pick up again next year.
According to data from Yahoo! Finance, Samsung’s stock price has fallen by 2.37% today. It"s the weekend now so if the stock price is going to take any more hits, we"ll have to wait until next week when trading resumes to see.