Published on : Oct 29, 2015
Technology giant Samsung Electronics Co. Ltd., announced that it has made a US$9.9 bn share buyback, or an 11.3 bn won buyback, in the first on-year profit growth registered in two years. The profit has been attributed to the steadfast Samsung component sales that propelled the company share sharply in the same quarter.
Samsung stated that there will be a cancellation of all shares bought in the buyback, which is its largest buyback to date. The electronics giant has also made arrangements to return free cash flow back to their shareholders. The returns will be between 30% and 50%, and will be made mostly through dividends.
The buyback will be executed in multiple phases over one year. The news was welcomed by investors who have been seeking larger payouts from one of the largest smartphone makers in the world. Samsung had recently lost market share to long-time rivals, Huawei Technologies Co. Ltd. and Apple Inc.
Park Jung-hoon, a fund manager at HDC Asset Management, said that the decision made by Samsung to buyback and cancel its own shares has been precisely the move that the market was looking forward to.
Samsung shares had almost reached a six-month peak. The company had risen 2.1% and had overtaken a 0.2% rise for the broader market.
Samsung also said that the operating profits for Q3 had increased 82% to US$6.5 bn, in accordance with its previous guidance. The company’s revenue also jumped 8.9% from 2014, to a high of 51.7 trillion won.
During the July-September period, Samsung gained 800 bn won due to circumstances that include the weakening of the won against the United States dollar.