Baek Byung-yeul is a journalist at The Korea Times focused on cultural content, including films and cultural events in South Korea. You can contact him at baekby@koreatimes.co.kr to share your insights.
Samsung Electronics to boost dividends through 2023
By Baek Byung-yeul
Tech giant's operating profit jumps 30% in 2020
By Baek Byung-yeul
Samsung Electronics announced Thursday it will pay record dividends to shareholders this year and continue to boost the amount over the next three years as part of efforts to improve shareholder value.
During a conference call following the release of its fourth quarter earnings results, the company told investors that it will pay 13.12 trillion won ($11.8 billion) in dividends to shareholders for the 2020 fiscal year. Thus, shareholders will receive 1,932 won per ordinary share that includes a year-end regular dividend of 354 won per share and 1,578 won in a one-off special dividend
Under a readjusted shareholder return program, the company added it will allocate 9.8 trillion won as dividends annually from 2021 to 2023.
The company also reported a net profit of 26.4 trillion won for 2020, up 21.5 percent from the previous year, with an operating profit of 35.99 trillion won on annual sales of 236.8 trillion won, up 29.6 percent and 2.8 percent, respectively.
In the fourth quarter alone, its operating profit stood at 9.04 trillion won, up 26.35 percent year-on-year. Sales grew 2.78 percent to 61.55 trillion won year-on-year. The improved figures were due to robust chip demand thanks to an enforced stay-at-home trend following the outbreak of the COVID-19 pandemic.
'We are on M&A hunt'
Samsung also said it will actively seek mergers and acquisition (M&A) opportunities and increase investments for the next three years as part of efforts to improve capability in the global IT market.
“We have very carefully reviewed M&A options over the past year. In accordance, we can say a lot of preparations for M&A have been in progress,” chief finance officer Choi Yoon-ho said. This was the first time for Samsung to officially reveal and M&A plan since the company acquired U.S. automotive electronics firm Harman in 2017.
“Due to the global uncertainties surrounding our business environment, it is difficult to talk of specific dates, but we think we will be able to make significant M&A deals in the next three years based on the preparations we have made,” he added.
There have been expectations that Samsung would push for sizable acquisitions focusing on semiconductors over the years as the tech giant's cash-equivalent assets as of the third quarter of 2020 stood at a whopping 116.2 trillion won ($104.1 billion).
Given global tech companies are seeking to evolve and take the lead in the post-COVID-19 pandemic period, all eyes are on which companies Samsung will try to acquire to strengthen its fundamentals.
Industry analysts forecast the company will push to acquire firms in the foundry sector in view of the fact that it has set a goal of becoming a leader in the contract-based chip-manufacturing business by 2030.
The CFO's comment on the firm's future is also in line with imprisoned Vice Chairman Lee Jae-yong's goals. In a statement made from prison, Lee expressed gratitude to his employees and asked the company to fulfill its duty, which is creating more jobs and making investments.
Since Samsung Group Chairman Lee Kun-hee passed away in October, 2020, family members of Lee have been slapped with a massive amount of inheritance taxes. The vice chairman and his siblings are expected to choose to pay the inheritance tax over a five-year period. The estimated amount of taxes on the late chairman's stock assets stand at around 11 trillion won.