Samsung pledges to double dividend to investors

SAMSUNG has bowed to shareholder pressure and pledged to return even more profit after almost doubling its full-year dividend to a record £1.2 billion.

A display of Samsung curved UHD TVs at the International Consumer Electronics Show in Las Vegas. Picture: AP
A display of Samsung curved UHD TVs at the International Consumer Electronics Show in Las Vegas. Picture: AP

The mobile phone giant, arch-rival of iPhone-maker Apple, has been under pressure to appease investors who claim it hoarded the spoils of rapid growth.

It has amassed some $51bn (£31bn) in spare cash in recent years by selling as many as one out of every three smartphones sold worldwide, but the amount reaching shareholders hit its lowest in 2012 in five years.

The South Korean firm yesterday reported its first quarterly operating profit decline in two years, partly because Apple’s new iPhones drew away sales during the crucial festive selling period in the United States and Japan. Yet Samsung doubled its 2013 dividend yield to 1 per cent – still half of Apple’s yield.

Robert Yi, head of Samsung’s investor relations, said: “Our goal on dividend payout this year is to significantly increase from 2013, but I can’t say for sure how much we’ll be paying.”

The group declared a 14,300 won (£8) per share dividend for 2013, or a total handout of 2.1 trillion won. The amount is 79 per cent more than a year earlier but represents just 6.9 per cent of 2013 profit.

Park Jung-hoon, a fund manager at HDC Asset Management, said: “Samsung is clearly under growing pressure to return more to investors. With its shares trending down, I think Samsung will have to consider extra measures like a share buyback at some point to address shareholder pressure.”

The maker of the Galaxy range of smartphones and tablets posted a 6 per cent decline in operating profit for October-December to 8.3 trillion won, matching its previous estimate.

The figure was brought down by an 800bn won special employee bonus to commemorate 20 years since chairman Lee Kun-hee announced a management strategy that the company regards as the catalyst to its recent growth. A stronger domestic currency also knocked off around 700bn won.

“It will be challenging for Samsung to improve its earnings in the first quarter as the weak seasonality of the IT industry will put pressure on demand for components and TV products,” the company said.

The group said its capital expenditure, a barometer of technology industry demand for manufacturing tools such as chip equipment, will be similar in 2014 to the amount spend last year.

Spending on marketing, however, will decline relative to revenue.

Kim Hyunjoon, senior vice president of Samsung’s mobile business, said: “We’ll actively leverage global sports events such as the Sochi [Winter] Olympics and our retail channels… but we will try to raise the efficiency of our marketing spend and lower our overall mobile marketing budget to revenue this year compared with last year.”

Samsung said that smartphones would account for 70 per cent of total mobile product shipments this year and that it would broaden its tablet line-up with mid and low-end models and larger screens.