Samsung Electronics Co., Ltd. (005930) Reports 42% Rise In Profit, Grows Cash Pile To Around $40 Billion

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Samsung Electronics Co., Ltd.(KRX:005930) reported their first quarter earnings today with a 42% rise in net profit.   Samsung also reported that their cash and cash equivalents increased to nearly $40 billion around the end of March 2013.  This is the second largest cash pile held by a company in Asia behind China Mobile Ltd.

Samsung’s net cash position is at 31.2 trillion won (around US$28.5 billion), which tripled in the past year alone as demand for their smartphones and tablets are surging. The massive profit comes mostly from smartphones, which generates more cash because these products do not require as much capital investment as it does for chips and components.

The company’s mobile business accounted for 74% of their operating profit and their consumer electronics division (TVs / chips/ components) made up the rest for Q1 2013.

Samsung will likely use the cash pile for acquisitions, dividend boosts, share buybacks, R&D, and marketing.  Samsung spent $22.8 trillion won (around US$25.8 billion) in capital expenditures for the year 2012.

Samsung has been relatively conservative in terms cash usage.  The company’s latest annual dividend was 8,000 won (0.54% relative to the share price) and their total dividend payouts decreased 5 years in a row to 5% in 2012 from 15.8% in 2007, according to the Wall Street Journal.  Samsung has not bought back shares since 2007 and their stock price has nearly tripled since early 2008.

This article was written by Amit Chowdhry. You can follow me at @amitchowdhry or on Google+ at
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