Difficult Financial Year Ahead For Samsung

By Vlad Tverdohleb | Jan 05, 2016 03:30 PM EST

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The South Korean giant Samsung warns that low growth may lead to a difficult financial year ahead.

The high-tech company has warned its staff that thet may expect to face a difficult business environment in the year 2016 due to slowing sales and growing concerns of financial health.

Reuters reported that Samsung's Chief Executive Kwon Oh-hyun declared in his New Year address to company's employees that the low global growth patterns will probabily continue throughout the year 2016. This factor may be compounded by other risk factors and uncertainty associated with developing countries' emerging markets.

The Samsung executive didn't disclose any specific forecasts and figures, however another issue is also greater competition against the firm's main businesses: television sets, consumer electronics, and chip production. This specific aspect could also stay in the way of the South Korean company's wishes for expansion.

 In an interview for Bloomberg, Kwon declared that "the territories of industries are collapsing" and the company needs to compete in new ways "never experienced in the past."

In the third quarter of the 2015 financial year, Samsung bounced back to profit after seven quarters of negative results. However, the company still failed to meet their own forecasts. The reported net profit of 5.46 trillion won ($4.8 billion) for the third quarter of 2015 was up 29.4 percent on a year-on-year basis, but still down 5 percent from the second quarter.

The company's improvement in profit results were attributed to strong smartphone sales. However, rivals on the market including low-end Chinese smartphone makers and Apple remain a better than Samsung's results.

According to the research firm IDC, the South Korean tech giant's main profit driver in the smartphone market niche is now low-end budget devices. In the meantime Lenovo, Huawei and Apple are focused on mid- to high-range products.

Despite an uncertain future, Samsung is still hoping of shaping a strong position in future businesses by carving its place in next-generation. The company launched at the end of December a smart bio-processor for use in the wearables industry and health field. The processor comes with features that can track temperature, daily fitness, stress and health levels.

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