Wed, Nov 01, 2017 - Page 10 News List

Samsung names chief financial officer as next chair

RETURNS:The South Korean tech giant said it would set aside 50 percent of its free cash flow to pay dividends, with any remaining funds to be used for share buybacks

Bloomberg

Samsung Electronics Co yesterday recommended Lee Sang-hoon as its next board chairman and announced changes at the top of its three main divisions in a major revamp of its executive ranks.

Lee is to leave the role of chief financial officer to become chairman, the first time the company has split chairman and CEO duties, Samsung said in a statement.

South Korea’s biggest company announced the changes just hours after detailing a boost to shareholder payouts and record earnings.

Samsung is bringing in new leadership as it continues to rebound from scandal thanks to smartphones and surging demand for its components, including the screen used in Apple Inc’s marquee iPhone X.

The executive changes come as de facto chief Lee Jae-yong appeals his prison sentence for corruption and patriarch Lee Kun-hee remains hospitalized.

The company is to retain its three CEO structure for the business units.

Kim Ki-nam is to succeed Kwon Oh-hyun as head of the display and semiconductor division, Kim Hyun-suk is to replace Yoon Boo-keun at consumer electronics and D.J. Koh is to take the place of J.K. Shin at the helm of mobile phones.

Shin and Yoon have offered to resign, while Kwon early last month announced his retirement.

Samsung shares rose 2 percent to 2.755 million won as of 2:36pm in Seoul, putting it on pace for a record-high close.

Earlier buybacks and growth in semiconductor and display earnings have helped Samsung stock outperform Apple in the past two years.

The Suwon, South Korea-based company said it would double annual dividends to 9.6 trillion won (US$8.6 billion) in the next three years, with capital spending this year to reach 46.2 trillion won.

“Samsung’s plan is line with the expectations of foreign investors who have eagerly sought better dividends,” Daishin Securities Co analyst Claire Kim said. “The overall return to shareholders will remain the same.”

Samsung is setting aside 50 percent of its free cash flow for shareholder returns.

After the dividends, the company said it might use any remaining portion of that money for share buybacks “as deemed appropriate.”

Net income rose to 11.04 trillion won in the three months ended September, the company said in a filing yesterday.

That compared with the 10.8 trillion won average of estimates compiled by Bloomberg.

Operating profit was 14.5 trillion won on sales of 62 trillion.

Investments in chips and displays has helped Samsung capitalize on a rally in semiconductor prices and demand from rivals for smartphones using organic LED displays.

A surge in global chip prices has bolstered the company, with its semiconductor division posting operating income for the quarter of 9.96 trillion won.

Operating profit from the smartphone business was 3.29 trillion won.

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