Samsung Profit Pain From Smartphone Challenge

Samsung Electronics has revealed a 19% decline in annual net profits - with rivals eating into its share of the smartphone market and semiconductor earnings falling.

The company warned that because of the economic slowdown across large parts of the world it would be a "challenge" to meet 2015's operating profit level in the current year.

It (Other OTC: ITGL - news) made a net profit of $15.8bn (£11.1bn) last year - the lowest level for four years.

The world's largest maker of memory chips for mobile devices, smartphones and TVs said weakening demand for consumer electronics knocked its fourth quarter net earnings by 40% - a larger margin than had been expected despite total sales rising 1%.

The company's semiconductor business - which has previously helped offset falling smartphone profits - joined the mobile division in enduring a weakening in profits.

Samsung's top end smartphones, including the Galaxy Edge series with curved displays, have failed to dent the dominance of Apple (LSE: 0R2V.L - news) 's iPhones while its cheaper alternatives have come under pressure from rivals Huawei and Xiaomi.

However, the weakening of demand was reflected in Apple's own results earlier this week when it forecast its first year-over-year iPhone sales decline in 13 years.

Robert Yi, a senior vice president at Samsung, told a conference call with investors: "It would be a challenge to maintain the 2015 operating profit level as we expect weak macroeconomic conditions and the IT demand to persist during the first half.

"However, we expect the business conditions to improve in the second half driven by the strong seasonality in set businesses," he said - referring to mobile phones, home appliances and TVs.

Samsung said its future plans included internet-connected gadgets for health and the home.