Value context and insight. lkm@koreatimes.co.kr
Naver's dividends fall to record low despite handsome net profit
Naver CEO Choi Soo-yeon / Courtesy of Naver
By Lee Kyung-min
By Lee Kyung-min
The dividend payout ratio for Naver, which operates Korea's largest online portal, fell to a record low of 0.5 percent last year, despite a significant increase both in its net income and payout total, data showed Wednesday.
The figure is the lowest since it began paying dividends to shareholders in 2011. Dividend payout ratios are measured by the paid dividend total divided by net income.
The IT giant with a market cap of over 56.26 trillion won ($46.38 billion), the fourth-largest on the benchmark KOSPI, paid over 76.29 billion won in dividends last year, up from 17.13 billion won in 2020.
Naver's net income was 16.4 trillion won last year, up more than 16-fold compared to 2020. Net income was 1 trillion won and the payout ratio was 5.9 percent in 2020.
In contrast, the ratio for its major competitor Kakao, spiked to 16.4 percent last year, double from 8.3 percent in 2020.
Naver shareholders are expressing frustration over the low payout, citing up to 25 percent in dividend payouts by financial firms.
“It is such a shame that the fourth-largest KOSPI-listed firm in Korea with a per-share price of 330,000 won pays only 500 won in per-share dividend,” read a comment posted on an online community of Naver shareholders. Dozens of posts demand Naver promptly increase the ratio.
However, Naver maintains that a surge in net income last year did not result from cash inflow and therefore provides no reason to raise the ratio.
The integration between Line Japan, the operator of the largest messaging app in Japan, and Z Holdings, a Tokyo-based firm controlled by SoftBank Group and Naver, led to an increase of 14.9 trillion won on the books without any cash exchanges, it said.
“The merger has essentially created a statistical illusion,” a Naver spokesperson said. “Excluding the 14.9 trillion won in net income, the dividend total paid out increased from that of 2019. Our shareholder return policy has not changed, as defined by 30 percent of the two-year average of free cash flow (FCF) on a consolidated basis.”
FCF is the cash flow available for the company to pay dividends. It measures profitability that excludes non-cash expenses and includes spending on equipment.