Samsung profit slips on coronavirus, more falls forecast

Samsung expects weaker results in the next three months, adding that “uncertainties driven by COVID-19 will persist” into the second half. (AP)
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Updated 29 April 2020

Samsung profit slips on coronavirus, more falls forecast

  • Net profits in the January-to-March period were $4 billion, down 3.1 percent from a year earlier

SEOUL: The world’s biggest smartphone maker, Samsung Electronics, said Wednesday that net profits in the first quarter were only slightly impacted by the coronavirus pandemic but warned of further falls to come as demand is “significantly” hit by the disease.
It reported on Wednesday that net profits fell slightly in the first quarter as the coronavirus pandemic dampened consumer demand, but warned of further falls to come.
Net profits in the January-to-March period were $4 billion, down 3.1 percent from a year earlier, the company said in a statement.
The January-March performance was “partially due to effects of COVID-19,” Samsung said in a statement.
And it said it expects weaker results in the next three months, adding that “uncertainties driven by COVID-19 will persist” into the second half.
The firm is the flagship subsidiary of the giant Samsung Group, by far the largest of the family-controlled conglomerates known as “chaebols” that dominate business in the world’s 12th-largest economy.
The figures come as the coronavirus pandemic wreaks havoc across the world economy — earlier this month Samsung had operations suspended at 11 overseas assembly lines — with expectations rife of a looming global recession.
In the second quarter, it warned: “Overall earnings are likely to decline from the previous quarter because COVID-19 will significantly impact demand for several of its core products.”
Memory demand “is expected to remain robust for servers and PCs as more people work from home,” it said.
But “sales and profits of set products business, including smartphones and TVs, are expected to decline significantly as COVID-19 affects demand and leads to store and plant closures globally.”
Woody Oh, a researcher at Strategy Analytics, said the first-quarter results showed only “a slight impact” from the virus outbreak, which emerged in China and spread to the US, Europe and India — Samsung’s key markets.
“But the real impact will show in the second quarter,” he said, adding almost all companies will report their worst results in April-June as the effects of the pandemic become clear.
Samsung had pinned its hopes for 2020 on a rollout of its new 5G and premium smartphones including its latest folding Galaxy Z flip phone.
“While a contraction of the global smartphone market is expected as a result of the COVID-19 outbreak, demand for 5G smartphones is forecast to grow,” DJ Koh, president of Samsung’s mobile division told the firm’s shareholder meeting last month.
Global smartphone sales dropped 14 percent year-on-year in February, according to the latest data from market researcher Counterpoint Research, although Samsung’s sales remained stable as it has limited exposure to the heavily hit Chinese market.
A report by market researcher TrendForce this month showed Samsung’s chip business may take a hit in the second half from shipment disruptions caused by virus lockdowns.
“Some of Samsung’s back-end server DRAM packaging operations are based in Luzon, the Philippines. Therefore, the continued quarantine of Luzon may affect the shipment schedule of Samsung’s server DRAM modules,” it said.
Overall, the Taiwan-based market researcher said it expects the rebound of memory chip prices to be “flattened” as the coronavirus pandemic dampens demand from the latter half of the year.
Adding to Samsung Electronics’ challenges, its vice chairman and de facto leader Lee Jae-yong is currently being re-tried over a sprawling corruption scandal that could see him return to prison.
He is not being held in custody during the proceedings, but a guilty verdict could deprive the firm of its top decision-maker.


‘Dubai will be my new Beirut,’ say grieving Lebanese workers

Updated 13 August 2020

‘Dubai will be my new Beirut,’ say grieving Lebanese workers

  • About 350,000 Lebanese now live and work in the six Gulf nations

DUBAI: Just days after the enormous blast that shattered Beirut, Ali Hammoud found himself looking down on the rubble from an airplane window, leaving behind his family and hometown.

Born and raised in Lebanon’s capital, the 30-year-old IT engineer finally decided to head for Dubai after the explosion destroyed his last hopes of ever seeing Beirut prosper.

“It’s not easy at all, but I had to finally leave. I feel I’ve betrayed the city I love to death, but there is nothing left for me there except depression,” Hammoud said after arriving in the Gulf emirate.

“Now I can start a professional career, live in peace and send money back to my family,” said Hammoud, who had spent a year looking in vain for work before the Aug. 4 disaster that left more than 170 people dead and compounded Lebanon’s financial crisis.

Like many of his compatriots longing for safety and stability, the young man has applied for a job in Dubai. He joins tens of thousands of Lebanese who helped build a glitzy city that reminds them of their parents’ tales of the glamor of old Beirut — but with glimmering skyscrapers instead of Ottoman-era and French colonial villas.

Last week’s explosion of a long-neglected stock of ammonium nitrate at Beirut’s port ripped through the vibrant coastal city known for its rich history as well as legendary nightlife and cuisine.

The fact that Lebanese officials had long tolerated a ticking time-bomb in the heart of the Mediterranean city has served as proof to many of the rot at the core of the state apparatus.

“My aim is to overcome the guilt of leaving,” said Hammoud. “Dubai will be my new Beirut.”

Long before the explosion, Lebanon was heading downhill fast. The country was mired in its worst economic crisis since the 1975-1990 civil war, with runaway inflation and bank capital controls fueling angry street protests.

Political life in the country has been dominated for three decades by former warlords who exchanged their military fatigues for suits.

Among Sunni Muslim, Christian and myriad other groups, the most powerful force is the Shiite Hezbollah movement.

After years of systematic corruption, unsolved assassination cases, wars with neighboring Israel, and lack of basic services, many Lebanese now see the country’s elite as fighting over the spoils. They are viewed as beholden to their personal and sectarian interests, rather than the good of the nation of 6 million.

“I can’t explain how frustrated I am. I had to leave my country years ago because of those warlords. They stole from us and now they kill us?” said Firas Rachid, a 31-year-old salesman who has lived in Dubai since 2016.

Beirut, once famous for top educational and medical establishments, has lost much of its pre-civil war identity and its reputation as an oasis of enlightenment.

Millions of Lebanese, from doctors to engineers, to teachers and other professions, have emigrated over the years, seeking a better life in the Gulf and beyond.

About 350,000 Lebanese now live and work in the six Gulf nations, more than 100,000 of them in the United Arab Emirates alone, mostly in Dubai.

“Why Dubai? We drive in lanes here, we don’t fear militiamen holding guns to our heads, we have basic services, and we get paid well,” said Rachid. “My parents always describe Beirut as a hub for the region in the ‘60s and ‘70s, but this is exactly what Dubai is now.”

In his book “My Story,” Dubai’s ruler Sheikh Mohammed Bin Rashid Al Maktoum recalls his first visit to Beirut, years before the civil war that brought the “Paris of the Middle East” to its knees.

“In the early 1960s, its streets were clean, neighborhoods beautiful, its markets modern. It was a source of inspiration for me. I had a dream for Dubai to become like Beirut some day,” he wrote.

Decades later, Dubai has become a magnet for millions of Arabs whose countries have been ravaged by poverty and conflict.

Jordanians, Palestinians, Moroccans and others have opted to build their future in the desert city.

It does not have the history or cultural heritage of their homelands, but for many it is a fair tradeoff for peace and financial security.

At a basketball game in Dubai last year between two Lebanese clubs with different sectarian ties, there was no violence, no sectarian chants, only the slogan: “Three, two one! We are one!“