Tech giant posts biggest ever quarterly profit in Q4
By Jun Ji-hye
Samsung Electronics’ board of directors approved a 50-to-1 stock split as part of efforts to boost shareholder value, allowing easier access for retail investors and boosting liquidity, the company said Wednesday.
The split will make investment in the firm “more accessible and provide dividends to a wider range of investors,” the company said in a statement. The surprise split decision changes the company stock’s par value to 100 won from 5,000 won. While reducing the price, it increases the number of stocks by 50 times.
Samsung will finalize the split at a general meeting of shareholders scheduled for March 23. The tech giant has been under pressure to conduct a stock split to lower investment barriers for individual investors.
“The split is expected to add both liquidity and marketability to the company’s stock, which will contribute to enhancing corporate value in the long term,” a Samsung official said. “We remain committed to increasing shareholder value through enhancing shareholder returns.”
The split, the first of its kind by the tech giant, will increase the number of common shares to 6.4 billion from the current 128 million.
Samsung also announced a year-end dividend of 21,500 won per common share.
Lee Sang-heon, an analyst at Hi Investment & Securities, said foreigners were the main investors in Samsung, but the split decision will open the door for individuals. Individual investors’ greater access to shares and increased liquidity would be a boon to the stock, he said.
Samsung Electronics shares closed up 0.2 percent or 5,000 won at 2.5 million won, off its daily high of 2.71 million won. The benchmark KOSPI closed down 0.05 percent at 2,566.46 points.
Analysts noted the increase in the number of minority shareholders as a result of the split could increase the possibility of them intervening in management of the company.
Meanwhile, the company said earlier in the day that it posted 15.2 trillion won in operating profit in the last quarter of 2017, up 64.3 percent from a year earlier, which was in line with its guidance announced previously. It was the biggest-ever quarterly profit, boosted by the so-called memory chip super cycle.
Its sales came in at 66 trillion won, up 23.7 percent from a year earlier.
For the full year, it posted 53.7 trillion won in operating profit on sales of 239.6 trillion won.
By sector, the company saw strong sales in its semiconductor business, reporting 21.1 trillion won, with an operating profit of 10.9 trillion won in the fourth quarter. On a yearly basis, it posted sales of 74.3 trillion won, with an operating profit of 35.2 trillion won. This accounted for about 66 percent of the whole operating profit for the firm.
Samsung is the leading manufacturer in the global memory chip market, with its DRAM and NAND flash _ the former is used for desktop computers and the latter is a building block for mobile devices such as smartphones.
In the second quarter of last year, Samsung outperformed its U.S. rival, Intel, and has been the world’s No. 1 chipmaker since then.
In its smartphone business, Samsung posted an operating profit of 12 trillion won in the fourth quarter, the biggest quarterly profit in three years.
Samsung expects its memory chip division to see strong demand in the first quarter of this year. It also said its mobile business will post stronger earnings on the launch of the Galaxy S9 flagship smartphone this spring.