Samsung projects drop in profits, but less than expected

SEOUL, Jan. 9 (UPI) -- Samsung Electronics is projected to report a profit decline more than 30 percent during the fourth quarter of 2019, but the figure is better than expectations.

The Seoul-based company announced Wednesday its earnings guidance for last year to estimate its fourth-quarter operating profit at $6.1 billion, down 34 percent from a year ago.

The guidance is better than the $5.6 billion average estimates of analysts, which was compiled by Bloomberg.

The tech giant's sales during the three months are predicted to remain stagnant at $51 billion, down 0.5 percent year-on-year.

As a result, its 2019 full-year operating income is expected to plunge more than 50 percent to $24 billion, which would be the lowest in four years.

The world's largest manufacturer of memory chips and smartphones plans to release detailed 2019 earnings later this month.

The weakening demand for memory chips has dealt a blow to Samsung, prompting the company to suffer from a fifth straight quarterly decline in income, according to analysts.

As the global memory chip market shows signs of rebounding, however, they forecast Samsung will be able to turn around this year, which they say is in line with the optimistic stance of investors.

Despite the disappointing performances throughout 2019, the stock price of Samsung jumped up to 44 percent in the Seoul bourse.

LG Economic Research Institute recently predicted that new data centers across the world will underpin demand for memory chips. The state-run Korea Development Bank released a similar opinion.

Hana Institute of Finance economist Lee Joo-wan concurred in his report this week.

"Korea's semiconductor exports have contracted for 13 consecutive months since December 2018, and our corporations have also slumped," Lee said.

"Recently, the semiconductor market shows signs of recovery. There is a possibility that semiconductor producers can rebound this year."