Samsung had a forgettable financial year in 2023. Compared to 2022, its annual profit declined by a whopping 85%. The company was hit hard by a drop in chip prices. Thankfully, the semiconductor market is recovering, and the Korean conglomerate benefits from it. The firm has shared its earnings estimates for Q1 2024 and things are looking a lot better.
Samsung estimates a massive 931% increase in profit in Q1 2024
According to Samsung, its consolidated sales revenue for the first quarter of 2024 will come in at approximately KRW 71 trillion, which is equivalent to $52.6 billion. The revenue is up by 11% from the KRW 63.75 trillion it generated during the same period last year. However, sales weren’t the company’s biggest problem in 2023. It generated decent revenue throughout the year. The firm’s profit margin was extremely low.
In the first two quarters of 2023, Samsung’s profit margin was just 1%. It increased to 3.6% in the third quarter and 4.2% in the fourth quarter. In Q1 2024, Samsung expects to take home a profit of approximately KRW 6.6 trillion (roughly $4.9 billion). That’s a massive 931% increase in quarterly operating profit from Q1 2023 when it made just KRW 0.64 trillion. More importantly, the profit margin is up to almost 10%.
Samsung will share official earnings figures for the first three months of 2024 at the end of April. That is when we will get a proper breakdown of revenue and profit from each of its business divisions. However, it is safe to say that the company has benefitted from improving chip prices. Memory chips, in particular, have been its cash cow for years, and last year’s slowdown had massive repercussions on its earnings.
Galaxy S24 may also have contributed to Samsung’s success
Despite being a global leader in the smartphone industry, Samsung doesn’t make a lot of money from smartphone sales. In the context of its overall revenue and profit, Galaxy phones contribute a small amount. The company certainly wants to change that. Over-dependence on the semiconductor business can hurt big time when the market dips.
To that end, Samsung has been working on improving the sales of its home appliances and smartphones. The Galaxy S23 series did fairly well last year, selling better than its predecessor. The company is en route to do even better this year with the Galaxy S24 series. The new flagships have been selling well since their launch in January, breaking pre-order records in some regions. Time will tell how much Samsung’s smartphone division contributes to its earnings in 2024.