- Korean electronics company has been a SKAGEN holding since 1997
- Generated NOK 14.5bn (€1.2bn) over 26 years for clients across three funds
- Engagement led to strengthening of corporate governance in 2020
The Korean electronics company first joined our funds when SKAGEN Global launched in 1997 and has been a portfolio mainstay ever since. It has also been a core holding for SKAGEN Vekst and SKAGEN Kon-Tiki over the years – alongside patience, sharing ideas is another important feature of SKAGEN's investment approach.
Over this 26-year period, Samsung's share price has risen over 1,300%, generating billions of NOK for our unitholders along the way. Clients in Global have received NOK 6.3bn (€536m) since 1997 and those in Vekst, which first invested the following year, have gathered NOK 1.5bn (€125m). Finally, Kon-Tiki's unitholders have received NOK 6.7bn (€573m) since Samsung entered the portfolio when the fund launched in 2002.
Alongside fantastic financial returns – in addition to its rising share price, Samsung has paid out between 18% and 78% of earnings as dividends over the last five years – being a long-term shareholder has also enabled us to engage on important issues. In 2018 we started a two-year dialogue with Samsung that helped to bring about improvements in several ESG areas including family succession and trade union relations.
Fredrik Bjelland, Lead Portfolio Manager of SKAGEN Kon-Tiki, explained the benefits of our position in 2020: "As long-term investors in Samsung we have witnessed encouraging developments in management’s engagement with various stakeholders across multiple ESG issues. By listening to minority shareholders and through a credible strengthening of routines, policies and corporate governance mechanisms, we believe the company is well positioned to continue to deliver significant value for its various stakeholders.”
Together for tomorrow
Samsung's slogan captures the company's vision and ability to continuously innovate over many decades. Formed in 1969, the company first gained recognition in the 1970s for its consumer electronics and has grown to become a global leader in TVs and smartphones with current market shares of 30% and 22%, respectively.
Samsung was also quick to recognise the importance of overseas markets, as Bjelland explains: "In 1997 South Korea was experiencing economic difficulties – high interest rates and low growth – that necessitated a bailout by the International Monetary Fund. Fortunately, Samsung was already an international business by this point with the majority of sales coming from exports and nine overseas R&D centres." Today, exports represent 90% of sales and the company has grown remarkably in terms of revenues, profits, assets and research expenditure.
Samsung has achieved this by expanding its product portfolio beyond its initial focus on home appliances into areas like memory chips and developing its software capabilities, as well as through acquisitions and strategic partnerships. Much of the company's progress was under the leadership of Lee Kun-hee, who played a key role in shaping its strategy and quality-focus before stepping down in 2014.
An emphasis on sustainability has also played a part as Bjelland outlines: "Beyond Samsung's own commitment to using renewable energy and reducing emissions, the role that its products play in the green transition is often overlooked. For example, it produces solar panels, batteries, EV components and LED lighting which are all needed at scale for clean energy development."
A key growth driver has been Samsung's semiconductor capability. With around 40% share of the market in revenue terms, it is the world's largest manufacturer of memory chips used in smartphones, computers and servers, in addition to providing foundry services for other semiconductor producers.
As well as being instrumental in its historic success, Bjelland believes Samsung's semiconductor strength also bodes well for the future: "The company's relentless investment in innovation and manufacturing excellence has enabled it to dominate a highly competitive and demanding market. This commitment and vision mean that Samsung is also well-placed to continue shaping tomorrow's technological landscape."
All figures as at 31/12/2022 unless stated.
 Source: SKAGEN as at 15/06/2023. Profit figures include mirror funds. NOK / € exchange rate as at 20/06/23
 Source: Samsung, 2018-2022
 Source: Samsung 1997 Annual Report
 Source: Samsung 2022 Annual Report