Samsung at risk of 2016 profit drop

Tech giant Samsung Electronics Co Ltd may be due for another profit drop in 2016, as slowing demand for consumer electronics saps momentum for the less-glamourous components businesses that offset last year's smartphone struggles.

The world's top maker of memory chips and smartphones is expected to guide on Friday its second straight quarter of annual profit growth for October-December. Analysts expect the South Korean firm's overall 2015 earnings to have rebounded moderately from 2014, when profit fell for the first time in three years.

But slower growth in China and the persistent weakness of emerging market currencies are eroding demand for consumer electronics, undercutting prices of the memory chips and displays that Samsung leaned on to cope with its mobile profit decline, and clouding its earnings prospects.

"I initially thought Samsung's 2016 profits would fall but still be close to 2015's, but that seems unrealistic at this point," said Park Jung-hoon, fund manager for HDC Asset Management. "Nobody has any idea about when and by how much demand can recover."

A Thomson Reuters SmartEstimate derived from a survey of 30 analysts tips Samsung's fourth-quarter profit to have risen 26 percent from a year earlier to 6.6 trillion won ($5.52 billion). But some brokerages recently cut their forecasts citing weaker-than-anticipated components sales, pushing the stock to its lowest level in three months on Monday.

Samsung Chief Executive Kwon Oh-hyun warned on Monday the firm faced challenges from weak global growth and heightened uncertainties stemming from factors such as financial risks for emerging markets.