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| Visitors are silhouetted in front of a huge screen showing a Samsung Electronics' smartphone in Seoul, Thursday. Samsung said it plans to repurchase 11.3 trillion won ($9.87 billion) worth of its own shares and write them off over the next year. / AP-Yonhap |
11 trillion won worth of shares buyback, increased dividend policy announced
By Kim Yoo-chul
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It plans to repurchase 11.3 trillion won ($9.87 billion) worth of its own shares and write them off over the next year.
On top of the share buyback scheme, it will also continue to expand dividends.
Samsung Electronics' internal cash-reserves stand at about 70 trillion won as of the end of September.
It announced the shareholder-friendly steps after reporting a stronger-than-expected third quarter performance.
It will carry out the share buyback and write-offs in three to four rounds. In the first, Samsung said it will buy back 4.2 trillion won worth of 2.23 million common and 1.24 million preferred shares from Friday until Jan. 29.
By 2017, Samsung will use 30 to 50 percent of its "free cash flow" for dividend payouts or share buybacks.
"We will continue steps to boost shareholder value. We also plan to start paying dividends on a quarterly basis from next year," said a company spokesman.
Thursday's announcement implies that Vice Chairman Lee Jae-yong, the only son of Chairman Lee Kun-hee, who has been hospitalized after heart surgery, is committed to taking shareholder-friendly measures.
"Under the new leadership, Samsung's top priority is how to cut concerns over its corporate future," a senior Samsung Electronics executive told The Korea Times. "The latest announcement is a message that the company will take steps for shareholders."
Analysts are positive about the announcement.
"It is a step in the right direction," said Park Young-joo at Hyundai Securities.
Pleasant surprise
Samsung Electronics reported 7.39 trillion won in operating profit in the third quarter, up 82.08 percent from a year earlier and up 7.18 percent from a quarter earlier.
This beat market consensus estimates of 6.5 trillion won.
Sales came in at 51.68 trillion won, up 8.93 percent from a year earlier and up 6.48 percent from a quarter earlier.
It said the strong semiconductor business and positive impact from a weaker won against the dollar helped lift its earnings.
About 800 billion won of additional profits were attributable to the positive impact of the won's weakness.
The semiconductor sector posted a record 3.66 trillion won in operating profit, beating its previous quarterly record of 3.42 trillion won in the third quarter of 2010. Semiconductor sales also posted a record 12.82 trillion won, compared with 11.29 trillion won the previous quarter.
However, its smartphone operations remained sluggish.
Park Jin-young, vice president at its telecommunications division, said demand for Galaxy S6 Edge failed to achieve its internal target.
Its mobile business posted 2.4 trillion won in operating profit, compared with 2.76 trillion won the previous quarter.
Robert Yi, head of Samsung's investor relations division, said the outlook for its components and home appliances businesses is promising for the final quarter of this year.
"Samsung's 14-nanometer processing chips have been successful and this will benefit us more. Also, in TVs, Samsung targets to sell about 16 million globally," Yi said.
On market speculation about Samsung Electronics merging with Samsung SDS, the company said it has no imminent plans to acquire the IT unit.
Samsung Vice Chairman Lee is the single biggest shareholder of Samsung SDS.
yckim@ktimes.com
