Samsung has warned that its quarterly profit for the three months to September was at a three-year low, resulting in the electronics giant's first annual fall since 2011.
Ahead of the release of its full financial results later this month, the South Korean company said its operating profit during the period declined by 60 per cent, largely because of a slowdown in sales of its Galaxy smartphones.
Operating income for the quarter was at 4.1trillion won (£2.5bn), falling short of analysts' expectations of 5.2tn won. Quarterly sales came to 47trillion won, also below analyst expectations of 50.3trillion won.
Samsung blamed its poor performance on fierce competition in the smartphone market from firms such as Apple and Lenovo.
"Smartphone shipments increased marginally amid intense competition," the company said in a statement.
"However, the operating margin declined due to increased marketing expenditure and lowered average selling price."
It added that it was "preparing new smartphone line-ups featuring new materials and innovative designs, as well as a series of new mid-to-low end smartphones".
Despite the poor performance, shares in Samsung went up by 1.6 per cent in Seoul after the warning was released.