Samsung Electronics posted its first drop in annual net profit in three years Thursday and saw resurgent arch-rival Apple barge in on its pole position as the world's top smartphone maker.

The South Korean firm, whose key mobile phone operations have struggled in the face of intense competition from cut-price Chinese rivals, also warned that it expected 2015's "business environment... to be as challenging as 2014."

The tech giant said Thursday it recorded a net profit of 23.4 trillion won ($21.45 billion) in 2014, down 23.2 percent from a year ago and the first decline since 2011.

Operating profit fell 11.7 percent to 25 trillion won in the year and sales also tumbled 10 percent to 206 trillion won.

Under growing pressure to boost shareholder returns, the company still managed to announce an increased dividend of 19,500 won a share, up from 13,800 won a year earlier.
The Samsung results contrasted sharply with the triumphant surge in the fortunes of California tech titan Apple, which reported a fourth quarter net profit of $18 billion -- the largest ever made by a public company.

Apple's performance was driven by the sale of 74.5 million iPhones, which included a doubling of sales volume in the crucial Greater China region.

Samsung's fourth quarter net profit, meanwhile, was down 27 percent at 5.3 trillion won.

Chip cushion

The fall was cushioned by a boom in high-margin chip sales that helped offset the downturn in the key mobile sector, with operating profit in the semi-conductor division rising 35.7 percent to 2.7 trillion won in the October-December period from a year earlier.
Samsung shares closed the day down 1.31 percent at 1,360,000 won.

The annual profit figure marked a dramatic reversal for the company, which is also facing a once-in-a-generation leadership change after several years of stellar growth, driven by the once all-conquering mobile division.

The popularity of the iPhone 6 helped Apple catch up with Samsung to share the title of world's top smartphone vendor, market researcher Strategy Analytics said Thursday.

Apple shipped 74.5 million handsets in the fourth quarter of last year with a market share of 19.6 percent -- on a par with Samsung, whose shipments and market share slipped markedly from a year ago.

Samsung had held the global smartphone vendor crown on its own since dethroning Apple in 2011.
Samsung's flagship Galaxy phones have suffered in the high-end market thanks to the popularity of the iPhone 6, while its dominance of the middle- and low-end handset segment has been challenged by Chinese firms such as Huawei, Xiaomi and Lenovo.

New strategy

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 Chinese rivals

Source: Daily Monitor