Samsung ‘To Focus On Growth Over Dividends’

Samsung is reportedly planning to focus on growth and may scale back paying dividends this year, as it continues to fight for market share with rivals including Apple.

The company’s plans include more and possibly larger acquisitions, in order to bring in technical expertise and new technologies that can be built into products such as its popular mobile devices, chief investor relations officer Robert Yi told Reuters.

“Our primary objective is growth and that is what we are communicating to our shareholders,” Yi said, adding that the company would “make efforts” to meet responsibilities to shareholders, including dividends and other forms of shareholder returns.

Last year Samsung increased dividend payments by 40 percent and carried out its first share buyback in seven years, but Yi said shareholders should not expect a similar increase this year, and an unnamed source told Reuters that Samsung will probably pay out less this year than in 2014.

Samsung’s profits declined in 2014 for the first time in three years as competition with Apple intensified.

The South Korean company continued to hold the No. 1 spot in worldwide smartphone shipments in 2014, with 28 percent of the world market, but slipped from 32.5 percent in 2013, while Apple held 16.4 percent of the global market in 2014, the same as the previous year, according to TrendForce figures released last month.

At the same time, Apple’s smartphone market share grew in markets including South Korea, where the release of the iPhone 6 helped it capture 33 percent of the market in November, the highest ever for a foreign company, according to recent figures from Hong Kong-based Counterpoint.

Apple competition

Apple also overtook Samsung for the first time in the US market over Christmas, also showing Christmas growth in Europe and China, according to Kantar Worldpanel.

Samsung Electronics held a cash reserve of 61.8 trillion won, or about £37bn, at the end of 2014.

Yi said Samsung may shift toward larger acquisitions in order to help spur growth this year, saying that the expertise acquired through such transactions “will make bigger M&A deals possible going forward”.

He acknowledged that investors including value fund managers have called for more dividends and share buybacks.

The company said it plans more public events and to make top management more available to institutional investors as part of strengthening its shareholder outreach programme.

Samsung has recently moved to follow Apple into mobile payments and offer business-grade security for its mobile devices.

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