Samsung expected to start massive buyback

Samsung Electronics is expected to implement a massive share buyback drive after announcing its third-quarter profit report next week, which is presumed to set another record amid strong returns from the chip business, industry watchers said Monday.

The company is also expected to announce detailed plans on buybacks and dividends for 2018-20, they added.

The outlook came as the tech giant said last year it plans to allocate around 50 percent of its free cash flow generated in 2016 and 2017 to bolstering the value of its shares to benefit shareholders.

Samsung’s expenditure on dividends and buyback programs accounted for 49.7 percent of its net profits last year, industry data showed, up from 39.2 percent posted a year earlier.

Of the net profit of 22.4 trillion won ($19.7 billion) generated last year, Samsung spent 2.9 trillion won on dividends and 7.1 trillion won on share buybacks.

Industry watchers said if Samsung maintains the ratio this year as well, the amount allocated for shareholders would reach a whopping 20 trillion won as securities firms are estimating a net profit of 41 trillion won.

As Samsung already spent around 6 trillion won on dividends and buybacks in the first half of 2017, the company needs to spend some 13 trillion won over the second half to keep the ratio at around 50 percent, under the assumption its annual net profit meets the expectation.

“As Samsung Electronics continues to emphasize its shareholder-friendly policies, it is likely that the size of the company’s dividends and buybacks will hit a record-high figure,” an industry insider said.

Earlier this month, the company said its third-quarter operating profit is expected to have nearly tripled on-year. Operating profit was estimated at 14.5 trillion won, compared with 5.2 trillion won tallied a year earlier. Samsung will release its finalized report on Oct. 31.

Yonhap