Samsung announced a big boost in dividends for the next two years alongside its third-quarter results. The company said it will increase the dividend for 2017 by 20 percent and double the dividend again in 2018.
The improved returns follow a strong increase in quarterly results, driven by the company's memory chip business and smartphone sales. Revenues rose 30 percent year-on-year to KRW 62.5 trillion, and operating profit nearly tripled, to KRW 14.53 trillion from KRW 5.20 trillion a year ago. Net profit increased to KRW 11.19 trillion from KRW 4.54 trillion.
The memory business showed the strongest growth, with sales up 65 percent to KRW 16.30 trillion. Samsung said it benefited from good market conditions, driven by demand for mobile and data centre applications. The supportive market environment is expected to continue into 2018.
Mobile market recovery
At the mobile business, revenues rose 23 percent to KRW 27.69 trillion, and operating profit jumped to KRW 3.19 trillion from 0.10 trillion a year ago, when the company suffered from the Note 7 recall. Samsung said smartphone shipments increased, driven by the launch of the Note 8
and strong sales of the new J series. However, earnings were down versus Q2 due to an increased share of mid- to low-end phones.
Samsung said it expects strong seasonal demand in the fourth quarter, but intense competition in the premium segment following the launch of Apple's new iPhones. The company will focus on improving profitability through its differentiated line-up and developing new services such as the IoT and digital assistant Bixby. Samsung also anticipates the smartphone market returning to growth in 2018, but with continued tough competition and higher material costs.
The one area of weakness in the Q3 results was display panels, where operating profit was down slightly year-on-year to KRW 0.97 trillion. While revenues were up, driven by strong sales of flexible panels, earnings fell due to lower prices for LCDs and costs for starting up more OLED production. Samsung said it expects OLEDs to become mainstream in smartphones in 2018, driving further growth, while competition will intesify in the more difficult LCD business, requiring a greater focus on costs to ensure profitability.
More cash flow for shareholders
The new shareholder returns programme will see dividends increase this year and next and be unchanged in 2019 and 2020, Samsung said. In addition, the company pledged to not use free cash flow for acquisitions, in order to leave more capital available for shareholder remuneration.
Samsung's previous three-year shareholder returns programme resulted in KRW 30 trillion paid to shareholders in dividends and buybacks. The company said this has helped its share price double since the start of 2016.
