A combination of weak demand, falling prices and strengthening South Korean currency have led to Samsung Electronics reporting a 30 percent drop in profits.
The South Korean company has reported profits for the first three months of 2011 of £1.6 billion, a 30 percent drop from the same period last year. The reasons given for the slump in profit is a weak demand for its products combined with falling prices for TVs and LCD panels. Another problem is the strengthening of the South Korean Won, which has risen by almost 11 percent against the dollar since last June. This means that Korean products are more expensive compared with their competitors in the region and it also hurts companies when they repatriate their foreign earnings back home. Smartphone sales were one bright spot for Samsung during the quarter but Robert Yi, a Samsung vice president, said the period had been difficult, and warned that the second quarter of the year is likely to remain an "adverse business environment," though he was more optimistic for the second half of the year.Announcing the financial results, Samsung also took the opportunity to have another pop at Apple in their on-going legal battle. Earlier this month Apple sued Samsung for “slavishly copying” the iPad and iPhone. A week later Samsung hit back with its own patent infringement lawsuit against Apple. Today it announced it was filing another lawsuit, this time in the United States, citing infringements of 10 patents covering mobile telecommunications and user interface technologies. A Samsung statement said: “Samsung is continuing to respond actively to the legal action taken against us in order to protect our intellectual property and to ensure our continued innovation and growth in the mobile communications business."
Samsung Electronics is undoubtedly facing a tough economic climate at the moment but with a range of new products including smartphones, and tablets arriving in the coming months, it should be able to survive on it’s merger £1.6 billion profits for the next three months.