Following SK Hynix's announcement of a shareholder return policy worth 40 trillion won, attention has turned to whether Samsung Electronics will declare a special dividend.
According to the electronics industry on the 19th, Samsung Electronics plans to unveil concrete shareholder return measures, including a possible special dividend, as early as this month, along with related policies to be applied from 2027 onward.
Under Samsung Electronics' current shareholder return policy, regular dividends of approximately 9.8 trillion won per year are paid using 50% of the free cash flow (FCF) generated over the three-year period from 2024 to 2026 as a source, with additional returns made if surplus funds arise thereafter.
In terms of funding sources, sufficient capacity has now emerged. According to Samsung Electronics' semi-annual report, as of the end of June, consolidated cash and cash equivalents totaled 92.9164 trillion won, while short-term financial products amounted to 97.0366 trillion won. After deducting short-term borrowings, current portions of long-term debt, corporate bonds, and long-term borrowings, net cash is estimated at approximately 167 trillion won. Previously, Samsung Electronics stated that it could flexibly announce and implement new shareholder return policies even before the expiration of its current policy, taking into account factors such as cash holdings. Accordingly, the increased cash reserves are considered one of the key variables in determining the next policy.
Samsung Electronics has a precedent for additional returns. In last year's settlement dividend, an extra 1.3 trillion won was distributed, considering tax reforms and expected dividend funding sources. Share buybacks were also carried out twice. Of the 10th trillion won share buyback plan announced in 2024, the first tranche of 3 trillion won acquired was fully retired last year. Additionally, shares acquired subsequently for the purpose of enhancing shareholder value were retired in April this year. Shares allocated for employee compensation were excluded from retirement. The total amount retired, based on acquisition cost, is approximately 5.3461 trillion won.
The key now lies in how Samsung Electronics will allocate its available resources between growth investments and shareholder returns. During last month's second-quarter earnings conference call, the company emphasized that "the board of directors and management are actively discussing concrete implementation plans for this year's shareholder return policy, including a possible special dividend," and added that "in-depth discussions are underway regarding the next shareholder return policy." It further promised to "prepare measures to maximize the effect of enhancing shareholder value and secure an optimal balance between reinvestment for future growth and shareholder returns, which will be shared with shareholders soon."
In this process, advance payments from long-term supply contracts (LTA) with memory semiconductor customers and share buybacks aimed at compensating employees may act as variables in FCF calculations. Even if the cash holding amount increases, not all of it can necessarily be considered a source for returns. However, given that net cash has expanded ahead of the expiration of the current policy, the industry is closely watching whether additional return measures will be included in the upcoming shareholder return policy announcement.
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