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Sep 12, 2019 / 10:29

Samsung Vietnam records 40% decline in profit amid unfavorable business environment

Ngoc Mai

In spite of decline in profits, as both Samsung and Apple launching their flagships in the third quarter of 2019, overall revenue and profits of Samsung, and its subsidiaries in Vietnam in particular, could receive big boost in the remaining two quarters.

Samsung’s four subsidiaries in Vietnam posted a combined revenue of US$31.8 billion in the first six months of 2019, up US$500 million year-on-year, while their net profit declined by 40% from US$3.2 billion to US$1.9 billion, according to Samsung’s consolidated financial statement. 
 
Illustrative photo.
Illustrative photo.
A sharp decline in Samsung Vietnam’s profit was due to unfavorable business operations of Samsung Electronics Vietnam Bac Ninh (SEV), which made up more than half of the US$1.3 billion loss in profit of Samsung. Meanwhile, Samsung Display Vietnam (SDV)’s profit of US$380 million in the same period of last year turned into a loss of US$30 million. 

The combined revenue of SEV and SDV declined by US$2.5 billion year-on-year in the first six-month period. 

Contrary to the negative performance of these two subsidiaries, Samsung Electronics Vietnam Thai Nguyen (SEVT) recorded an all-time high revenue of US$7.8 billion in the second quarter, in turn partly offsetting the losses incurred by SEV and SDV. 

The SDV is known for manufacturing display screens for both Samsung and Apple’s products, while the SEV and the SEVT are two key Samsung’s smart phone production bases globally. 

The inefficient of operation in Samsung’s four subsidiaries in Vietnam led to a lower-than-expected revenue and profit of Samsung globally in the January – August period at US$95 billion and US$8.9 billion, down 9% and 55% year-on-year, respectively. 

In spite of declines in profits, as both Samsung and Apple launching their flagships in the third quarter of 2019, overall revenue and profits of Samsung, and its  subsidiaries in Vietnam in particular, could receive big boost in the remaining two quarters. 

In 2018, Samsung’s combined revenue in the global market reached US$221.6 billion, slightly up from US$217.8 billion in 2017, while after-tax profit increased from US$38.3 billion to US$40.3 billion. 

Vietnam’s GDP in 2018 reached US$238 billion, of which Samsung’s operation in Vietnam made up 27.6% of the total, down from 33% recorded in previous years. 

In 10 years, Samsung has increased its investment capital in Vietnam from US$670 million to over US$17.3 billion, a 26-fold increase. More importantly, all the registered capital has been fully disbursed, stated Shim Won Hwan, former CEO of Samsung Vietnam.  

According to Samsung's statistics, around 50% of Samsung's smartphones and tablets are produced in Vietnam and exported to 128 countries and territories, including the US, Europe, Russia and Southeast Asia.

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