SK hynix reports record profits in 2014

Chipmaker doubles dividend payouts on strong performance

By Kim Yoo-chul

SK hynix, the world's No. 2 memory chipmaker, posted 5.1 trillion won in operating profit last year, up 51 percent from a year earlier.

It is the biggest in more than three decades since the firm started the chip business in 1983.

In a filing to the Korea Exchange (KRX), the SK Group unit said sales came in at 17.12 trillion won, up 21 percent. Net profit was 4.19 trillion won, up 46 percent.

Shares of SK hynix advanced 0.1 percent to end at 49,200 won, Wednesday.

It beat market expectations. Its operating profit margin was 30 percent with its net profit margin reaching 24 percent.

"This is really huge. SK hynix is rewriting its history. The thing is that this year will even be better as the underlying long-term structural change is slowing supply growth on technological complexity and rational behavior in a more consolidated industry," said Lee Min-hee, an analyst at IM Investment.

For the fourth quarter, SK hynix clinched a quarterly record as sales, operating profit and net profit recorded 5.14 trillion won, 1.66 trillion won and 1.62 trillion won, respectively.

"SK hynix has continued to pursue profitability-driven growth. We've been consistent in migrating our chip technologies into thinner ones to save cost and improve profitability," said Son Kyung-bae, a spokesman at the Icheon, Gyeonggi Province-based outfit.

For details, the company increased the portion of chips using a 25-nanometer processing technology to 40 percent out of the total, helping it sell more advanced chips to major clients.

In NAND flashes, in which the company intends to grow, new product launches by leading handset manufacturers helped it see expanded shipments.

"Amid an increasing demand for 'big data' analytic tools and huge demand for data-intensive device solutions, demand for server chips will rise this year. The industry is on a track to move into DDR4 chips from DDR3, helping chipmakers such as SK hynix see further growth opportunities," SK hynix said.

The company said it will mass-produce chips with early 20-nanometer processing technology, while it will push to expand the shipments of premium NAND-embedded solutions such as solid state drives based on a triple-level cell technology.

Doubled dividend payouts

Impressed by such brighter performance, SK hynix said it will pay 300 won in dividend per share, with a total dividend payout amounting to 218 billion won.

This decision is still subject to shareholders' approval. The ratio of dividend to profit marked 5.8 percent.

This is the second time for the company to payout dividends to shareholders since it did so in 2010. At that time, before the firm was acquired by the SK conglomerate, it paid 150 won.

"SK hynix will try hard to boost our shareholder value. We understand that our shareholders want us to pay more," said a senior SK hynix executive by telephone, adding the company plans to spend more on dividend but upon market situations.

In a conference call to investors, its head of finance division Lee Myung-young said the chipmaker plans to invest about 5.2 trillion won for technology migration and maintenance, implying that no new manufacturing lines will be built.

"Our free cash-flow isn't the level to payout for dividend. But we decided to pay in our response from our shareholders for their steady support," said Lee, adding the firm will continue paying to shareholders.