Samsung Electronics announced a special dividend alongside its annual results, as well as a higher dividend for the next three years. The company confirmed fourth-quarter results were relatively soft, due to declines in smartphones and consumer electronics, and said it sees overall weaker profit in Q1 as well. For the full year, Samsung expects a recovery in demand, but potential recurring outbreaks of Covid-19 cloud the outlook.
The company said it will pay out KRW 10.7 trillion in excess cash flow from the KRW 79.2 trillion generated over the past three years. This means shareholders will receive a dividend in April of KRW 1,932 per common share and KRW 1,933 per preferred share, including respectively KRW 354 and KRW 355 as regular dividend.
Under the previous returns programme for 2018-2020, the company said it would return 50 percent of free cash flow as regular dividends, and anything remaining of the other 50 percent after business needs. Samsung announced a new three-year programme with the same commitment. It also increased the regular dividend to KRW 9.8 trillion per year from KRW 9.6 trillion.
The announcement comes alongside annual results showing net profit up 21.5 percent to KRW 26.41 trillion. Annual revenues rose 2.8 percent to KRW 236.8 trillion, as 12 percent growth in semiconductors and 6 percent growth in consumer electronics offset a 7 percent fall in sales from the mobile business. Results were similar in the fourth quarter, with sales up 2.8 percent to KRW 61.55 trillion and net profit rising 26.4 percent to KRW 6.61 trillion.
Mobile revenues were down 10 percent year-on-year and 27 percent lower than in Q3 to KRW 22.34 trillion in Q4, and operating profit fell to KRW 2.42 trillion from KRW 2.52 trillion a year ago and KRW 4.45 trillion in Q3. Samsung blamed the quarterly decline on the seasonal increase in marketing costs and tough competition during the holiday season.
Samsung expects a sequential improvement at the mobile business in Q1 thanks to the launch of the new S21 smartphone series and new mass market models. For the rest of 2021, it's aiming for growth with mass-market 5G phones, popularizing foldable phones and new tablets and wearables.
Overall, the company said it expects a recovery in global demand in 2021, but the outlook is made uncertain by the possibility of recurring Covid-19 waves. Samsung's main growth generator, the memory business, is expected to see a recovery during the first half thanks to strong DRAM demand from mobile and server applications, and Samsung also aims to grow its foundry business with mass production of 5-nm products.
In the fourth quarter, semiconductor sales were up 8 percent to KRW 18.18 trillion, including a 2 percent increase in memory to KRW 13.51 trillion. Operating profit from the chip business rose 11.6 percent year-on-year to KRW 3.85 trillion but was down from KRW 5.54 trillion in Q3 due to negative currency effects, a lower memory ASP and costs to start up new production. Samsung said profit from the memory business will likely remain under pressure in Q1 from the strength in the won and costs associated with new production lines, despite solid demand from mobile products and data centres.
