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| The headquarters of Samsung Electro-Mechanics located in Suwon, Gyeonggi Province / Courtesy of Samsung Electro-Mechanics |
Samsung Electro-Mechanics Co., a major electronic components maker under South Korea's Samsung, said Wednesday its fourth-quarter operating income tumbled 68 percent from a year earlier as weak demand for IT devices crimped the bottom line.
Operating income reached 101.2 billion won (US$82.1 million) in the October-December period, compared with 316.2 billion won the previous year, the company said in a regulatory filing. Sales decreased 19 percent on-year to 1.96 trillion won.
The quarterly profit fell below market expectations. The average estimate of operating profit by analysts was 121.1 billion won, according to a survey by Yonhap Infomax, the financial data firm of Yonhap News Agency.
"Slowing demand for finished products in the fourth quarter and off-season factors hurt the earnings in key products, such as multilayer ceramic capacitor (MLCC), camera modules and mobile ball grid array substrates," the company said.
Samsung Electro-Mechanics mainly develops and manufactures advanced electronics and mechanical components, including chip parts, such as MLCCs, that control the flow of the current in a circuit, semiconductor substrates camera and network modules, and printed circuit boards.
The company forecast that packaging substrates for high-performance computing will continue to grow this year, while demand for smartphones and PCs is expected to decline.
Samsung Electro-Mechanics plans to ramp up its high-end lineup, primarily the substrates for servers that went into mass production from last year.
The company said in an earnings call that capital expenditure will decrease this year compared with last year due to the weak demand, except for the substrates.
The operation rate for MLCCs is expected to improve this year based on China's reopening.
For 2022, the net profit rose 8.5 percent on-year to 993.5 billion won. The company booked 1.18 trillion won in operating income for the year, down 20.4 percent from the previous year, with the annual revenue falling 2.6 percent to 9.42 trillion won.
Shares of Samsung Electro-Mechanics rose 1.9 percent to 150,800 won on the main Seoul bourse Wednesday, outperforming the broader KOSPI's 1.39 percent gain. The earnings results were released before the market closed. (Yonhap)
