Samsung flags 37% on-year fall in Q4 profit

Samsung Electronics today flagged a further on-year plunge in profits for the fourth quarter, as the world's top smartphone producer continued to battle stiff competition from Chinese makers.

Operating profit for the October-December period was estimated at 5.2 trillion won ($4.7 billion), down 37.4% from the fourth quarter of 2013, the company said.

The profit estimate was higher than many analyst expectations with strong demand for high-margin chips mitigating slumping profits in the key mobile sector.

Sales totalled about 52 trillion won in the quarter, the company said, down 12.3% from a year earlier.

The estimate offered no net profit forecast or details of divisional earnings, which will be provided in an audited earnings report later this month.

The South Korean behemoth, which is also facing a once-in-a-generation leadership change, saw its net profit decline sharply by 20 and 50% in the second and third quarters of 2014 respectively.

The nosedive has been all the more dramatic for coming after several years of stellar growth, driven by surging smartphone sales.

But the company's flagship Galaxy phones have suffered in the high-end market from the popularity of arch-rival Apple's iPhone 6, while dominance of the middle- and low-end handset segment has been challenged by Chinese handset makers such as Huawei, Xiaomi and Lenovo.

Mainland China is the world's largest smartphone market, and Xiaomi's cheap, feature-packed handsets had already ousted Samsung as the top seller there in the second quarter of 2014.

Samsung plans to slash the number of smartphone models it issues in 2015, while boosting production of remaining models that can be sold more cheaply to compete with cut-price Chinese rivals.