Seoul-blackening disappointment for Samsung backers as stock droops

Shares in Samsung Electronics fell to their lowest in four months, dropping over four per cent on Thursday, after analysts said the firm's quarterly earnings were likely to be hit by the strong won and weaker business in its display unit, according to Reuters.

The Korean chaebol's stock closed down 4.6 per cent on its fifth consecutive day of falls, which have wiped nearly $18bn off its market value.

The company is due to report its financials for the three months from October to December next Tuesday, but some analysts are expecting profits to drop. An average estimate of 40 analysts by Thomson Reuters I/B/E/S forecasts a record 10.3 trillion won of operating profit, up a per cent from the previous quarter. But Starmine Smart Estimate is forecasting a 3.6 per cent fall in operating profit from the previous quarter to 9.9 trillion won.

"We expect Samsung's performance to be about 9.5 trillion won, lower than the market consensus of around 10.2 trillion won. The biggest reason would be the won-dollar exchange rate, followed by shrinking margins in organic light-emitting diode (OLED) sales," said Lee Seung-woo, tech analyst at IBK Investment & Securities.

The strengthening won has already hit major exporters like Hyundai and Kia Motors, who saw their shares drop five and six per cent respectively. With the won at its highest level since mid-2008 Sammy won't get as much money in from its component business, where the sales are usually in US dollars. ®