Samsung posts first profit slump in two years stoking fears of smartphone saturation

The logo of Samsung Electronics is displayed on a glass door at their headquarters in Seoul on November 6, 2013. Samsung Electronics promised better shareholder returns, dismissed fears over smartphone market saturation and signalled a more aggressive acq (JUNG YEON-JE/AFP/Getty Images)

Samsung has posted its first fall in quarterly profits for more than two years, fuelling fears that the booming smartphone market may be reaching saturation.

The world’s biggest smartphone and TV maker reported a net profit of 7.30trn (£4bn) won, down from 8.24trn (£4.6bn) won a year earlier.

The company’s was weighed down by falling margins at its IT & Mobile division, where operating profit fell 18 per cent. Mobile sales, the company’s main earnings driver, fell 9 per cent in the quarter.

The South Korean electronics giant warned that it expects sales in key divisions to continue to fall in the first quarter of 2014 with TVs entering an “off-season” and competition intensifying in in the smartphone and tablet markets.

Samsung is under pressure to present a strategy for continued growth. While the firm has a dominant position in the Western smartphone market, the company faces intense competition in the crucial Chinese market from lower-cost homegrown rivals such as Xiaomi.

Despite the decline in profits in the last quarter Samsung posted record annual earnings, with profits jumping 28 per cent to 30.5 trn won (£17bn).