April 25, 2024

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[THE INVESTOR] Samsung Electronics on Oct. 31 announced a significant increase in dividends on the back of record profits in the July-September period, pledging to make further efforts to enhance shareholder value.

The tech giant said it will increase its annual dividends by 20 percent to 4.8 trillion won (US$4.28 billion) this year and double the amount to 9.6 trillion won in 2018. The annual dividends in 2019 and 2020 will remain at the same level as 2018, according the firm.

The combined dividend payouts from 2018 to 2020 will reach some 29 trillion won.

“The company will continue to ride the recent momentum to keep its businesses more profitable and competitive by making investments to secure differentiated technology,” said Samsung CFO Lee Sang-hoon, vowing to make the utmost efforts to improve shareholder value.

According to the new policy announced on the day, investments for mergers and acquisitions will not be deducted from the firm’s cash reserves, leaving more capital to return to shareholders.

In a bid to bring stability to shareholder returns, Samsung said it will continue to commit 50 percent of its cash reserves for shareholders in the next three years.

Along with the new shareholder returns policy, the tech behemoth announced it will carry out the fourth buyback and cancellation program for the next three months from Nov. 1. It plans to repurchase and cancel 712,000 common shares and 178,000 preferred shares.

In the previous three phases of the buyback and cancellation scheme, Samsung invested around 7 trillion won to buy back its own stocks.

Meanwhile, the company posted a record operating profit of 14.53 trillion won in the third quarter with its revenue standing at 62.05 trillion won, according to its regulatory filing.

The tech giant attributed the robust sales of memory chips and smartphones to the latest record performance.

The semiconductor and smartphone businesses raked in 9.96 trillion won and 3.29 trillion won operating profit, respectively, accounting for 91 percent of its overall operating income.

Aiming to tighten its grip in the global chip and display sector, Samsung said it will spend 46.2 trillion won by the year-end to beef up its facilities for chips and displays, up from 25.5 trillion won last year. It made a combined investment of 32.9 trillion won until the third quarter.

Currently, the company is beefing up its facilities dedicated to manufacturing V-NAND memory chips in Pyeongtaek, Gyeonggi Province, and is investing to switch some of its existing facilities to those for DRAM. Investments to build additional manufacturing lines for OLED display, a highly popular smartphone component, are currently underway, the company said.

By Kim Young-won (wone0102@heraldcorp.com)