Samsung doubles dividend despite fall in operating profit
Samsung Electronics, under pressure to appease investors who have berated it for hoarding the spoils of rapid growth, has pledged to hand out even more profit after almost doubling its full-year dividend to a record $2bn (£1.2bn).
The main rival of Apple has amassed $51bn in spare cash in recent years by selling as many as one of every three smartphones, but the amount of profit reaching shareholders hit its lowest in 2012 in five years.
Some investors have called for more returns, but the biggest maker of TVs, smartphones and memory chips has been reluctant to change its payout policy largely because of a need to build funds to secure future growth.
Samsung's smartphone market share will be challenged this year as Apple starts selling iPhones via China Mobile, the world's largest carrier by subscribers. Apple is also widely expected to release iPhones with big-screens, a key feature of Samsung's Galaxy range.
On Friday, Samsung reported its first quarterly operating profit decline in two years partly because Apple's new iPhones drew away sales during the year-end holiday period in the United States and Japan.
Yet Samsung doubled its 2013 dividend yield to 1%, sticking to a promise made to shareholders in November. Investors point out that is still half of Apple's 2%.
'Our goal on dividend payout for this year is to have that significantly increase from 2013, but I can't say for sure how much we'll be paying,' Robert Yi, head of Samsung's investor relations, told analysts after the earnings release.
The South Korean manufacturer declared a ₩14,300 (808p) per share dividend for 2013, or a total handout of ₩2.1tn. The amount is 79%t more than a year earlier but is just 6.9% of 2013 profit.
'Samsung is clearly under growing pressure to return more to investors,' said Park Jung-hoon, a fund manager at HDC Asset Management.
'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.'
Shares of Samsung, worth $204bn, ended up 0.62% compared with the benchmark index which fell 0.36%. The stock has fallen 8.8% in the past month on concern over slowing smartphone growth.
Samsung posted a 6% on-year decline in operating profit for October-December to ₩8.3tn, the company said on Friday, matching its previous estimate.
The figure was brought down by an ₩800bn 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.
'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 in a statement.
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