Samsung Electronics Co yesterday unveiled an 11.3 trillion won (US$9.87 billion) share buyback scheme after reporting its first on-year profit growth in two years thanks to strong component sales, pushing its shares sharply higher.
Samsung said it would cancel all shares purchased through the buyback, its biggest to date, and planned to give shareholders 30 percent to 50 percent of its free cash flow over the next three years, primarily through dividends.
The buyback, to be carried out in phases over one year, will be welcome news for those investors who have been clamoring for bigger payouts from the world’s top smartphone maker.
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“Samsung’s core smartphone business is struggling, which means the shares would likely fall. The buyback helps defend the stock price,” said Chung Sun-sup, head of corporate analysis firm Chaebul.com.
Canceling the purchased shares would also help the Lee family — founders of the Samsung Group — boost their control of the conglomerate’s crown jewel.
Samsung’s shares yesterday touched a near six-month high and ended up 1.3 percent in Seoul trading, compared with a 0.4 percent decline for the broader market.
The maker of the Galaxy-series handsets and tablets said third-quarter operating profit jumped 82 percent to 7.4 trillion won, in line with its guidance. Revenue rose 8.9 percent from a year earlier to 51.7 trillion won.
Samsung said that earnings would fall sequentially in the fourth quarter as currency conditions — which added 800 billion won to profit in the third quarter — became less favorable.
The mobile division posted its first on-year profit growth in two years, climbing 37 percent to 2.4 trillion won, thanks to strong sales of the Galaxy Note 5 as well as new lower-end products.
The firm said it aimed to keep fourth-quarter mobile profits at a similar level, although the outlook beyond that was unclear as it expected the global smartphone market to slow next year.
Despite a major overhaul of its product lineup, Samsung’s smartphone shipments are set to shrink for the first time this year due to competition from Apple Inc in the high-end market and Chinese rivals in the low end, Taipei-based researcher TrendForce Corp (集邦科技) said.
The chip division was the company’s top earner for the fifth-straight quarter, with a record 3.66 trillion won profit thanks in part to demand from smartphone makers.
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