Samsung today announced its third quarter results, the company is back to operating profit growth after seven straight quarters of decline, it also announced a share buyback program today worth $9.9 billion or 11.3 trillion Korean won. This announcement, coupled with Samsung’s first operating profit growth in two years, has had an immediate effect with shares of the company rising sharply. This buyback will be implemented in 3 to 4 stages and will be completed in one year, the company’s board has already approved 4.2 trillion won for the first phase which begins October 30 and lasts for about three months. Samsung will be cancelling all shares purchased in the buyback which is its biggest to date and plans to dole out 30% to 50% of its free cash flow to over the next three years primarily by issuing dividends.
Many Samsung shareholders have been calling on the company to increase its payouts, the share buyback will certainly be welcome news for them coupled with the promise of increased dividends down the line. Over the next three years the annual shareholder return will mainly focus on dividends with the remaining allocated capital being used for further buybacks with any and all repurchased shares being cancelled. Samsung is going to announce 2015 year-end dividend in January 2016 when the board will sit to make a decision.