Samsung’s profits have been hit by declining sales of smartphones and semiconductors.
The “tough business environment and the slowdown in IT demand” led to a 40% drop in net profit for the fourth quarter of 2015 to 3.2 trillion won ($ 2.7 billion).
The technical giant warned that it would be difficult to keep profits this year at the same level as in 2015.
Samsung’s revenue for 2015 decreased by 5.6 trillion won to 200.6 trillion won ($ 165.5 billion) compared to the previous 12 months.
Strong competition from cheaper Chinese competitors such as Xiaomi and Huawei at the bottom of the market, as well as Apple in the premium class, has confused sales of Samsung’s smartphones.
Galaxy S6, the latest high-end device, released in April 2015, failed to excite consumers and the company is struggling to maintain market share.
Samsung forecasts single-digit sales growth for both smartphones and tablets amid “demand easing and increased competition.”
“Despite this challenging environment, the company will focus on increasing smartphone shipments and maintaining double-digit margins by issuing competing devices.” Samsung said in a statement.
Samsung’s other core business, semiconductors, also met headwinds after lower demand for personal computers.
The company produces components for the iPhone, which itself is facing a slowdown in sales.
Apple said on January 26 that it expects to see the first drop in iPhone sales in the current quarter.
Shares of Samsung Electronics fell 2% in Seoul.