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Samsung's yearly profits up 27% after strong mobile growth

Samsung's YoY profit rose by 27% during 2013. Mobile revenue is leading the way with growth of 32%. However, Q4 profits took a hit as a result of high marketing expenses.
January 24, 2014
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It’s the time of the year when companies publish their earnings reports for the previous year. Most recently Samsung took its turn to let investors know how the company has performed throughout 2013, and it appears that Samsung is having some mixed fortunes.

Samsung’s financial report shows, as predicted, that the company’s fourth quarter operating profit held steady compared with Q4 2012, quarter on quarter profits fell slightly, whilst yearly operating profit rose by 27%.

Despite the fall in quarterly operating profit, Samsung’s Q4 2013 sales revenue was actually up by just over 3 trillion Won ($2.8 billion) compared with Q4 2012, and yearly sales grew by a very healthy 27.6 trillion Won ($25 billion).

Looking more specifically at the company’s mobile operations, year on year revenue was up a very healthy 32%, however going from Q3 to Q4 2013 Samsung’s mobile sales actually declined by 9%. A slightly worrying sign considering that Q4 is usually a time when consumers are willing to spend a little more money.

Samsung sales and profits 2013

Operating profit was even worse off, suffering an 18% decline in the mobile communications department during the fourth quarter. However, Samsung was keen to explain that this decline in profitability was more a result of marketing costs and “year-end inventory adjustments” which lowered shipments and affected profits. Samsung points out that its smartphone and tablet sales are stronger than ever, and on a year by year basis that is certainly the case.

In future Samsung is aiming to curb its marketing costs in order to realise a greater profit on its growing mobile sales. Senior Vice President Kim Hyunjoon told analysts that:

we will try to raise the efficiency of our marketing spend and lower our overall mobile marketing budget to revenue this year compared with last year

Mr Hyunjoon believes that one way to do this may be to obtain coverage through sponsoring global sports events, such as the Sochi Winter Olympic games, rather than by direct marketing. We’ll have to wait and see exactly what this means for this year’s upcoming devices.

Overall 2013 was another positive year for Samsung, and with the Galaxy S5 waiting just around the corner 2014 will likely be another financially strong year.