Samsung Electronics has warned investors of a negative earnings surprise for the first time since its inception 50 years ago. “Our Q1 performance, affected by adverse display and memory chip market conditions, is likely to be less than market expectations,” the company said on March 26.
When it comes to display, it said that the global LCD panel demand was low due to seasonal factors and Chinese display panel manufacturers increased their supply based on facility expansion, which led to a steeper-than-expected drop in price. “Major clients reduced their demand for flexible OLED panels and price competition with LTPS LCD panels went on, resulting in a drop in profitability,” it explained. Regarding its memory chip business, it said major products’ prices fell more than expected in the low season.
Samsung Electronics’ Q1 earnings announcement is scheduled for April 5. The company’s pre-earnings announcement explanation on March 26, which is without precedent, is regarded as a forewarning for investors with securities companies’ performance estimates for the company still quite high. Earlier, the company made similar remarks during its Q4 earnings announcement early this year in order to explain why its performance fell short of market expectations.