Business Groups Strengthen Shareholder Return Policy
The amount of cash dividends paid by the top 10 business groups in South Korea surpassed 20 trillion won (US$17.62 billion) last year, hitting a record high. These groups strengthened their shareholder return policy in response to the introduction of a stewardship code by institutional investors and the emergence of activism funds.
The total amount of cash dividends paid by 73 listed firms under the country’s top 10 business groups came to 20.73 trillion won (US$18.27 billion) as of March 29, up 33.7 percent from 15.51 trillion won (US$13.67 billion) a year earlier, according to financial market researcher FnGuide on April 1.
The payout ratio stood at 20.81 percent, up 5.22 percentage points from 15.59 percent a year ago. The net profits of listed affiliates of the top 10 business groups increased 0.16 percent from 994.90 billion won (US$876.56 million) to 996.50 billion won (US$877.97 million) over the same period, while their dividends grew by a large amount.
By group, Samsung Group showed the highest growth in dividends. The amount of dividends of 13 listed companies under the group surged as much as 52.74 percent on-year from 7.65 trillion won (US$6.74 billion) to 11.69 trillion won (US$10.30 billion). The payout ratio was 22.47 percent, up 6.27 percentage points from 16.20 percent a year earlier. In particular, Samsung Electronics paid out 9.62 trillion won (US$8.48 billion) of dividends last year, showing a whopping 69.09 percent increase from 5.83 trillion won (US$5.13 billion) at the previous year.
The total dividends of SK Group’s 13 listed affiliates came to 2.90 trillion won (US$2.55 billion) last year, up 14.59 percent from 2.53 trillion won (US$2.23 billion) in 2017. However, the payout ratio dropped 0.8 percentage point on-year to 10.78 percent, becoming the only one showing a minus growth among the top 10 groups. This was largely due to the fact that the net profits of listed subsidiaries under SK Group stood at 26.84 trillion won (US$23.65 billion) last year, up 23.12 percent from 21.80 trillion won (US$19.21 billion) a year ago.
Hyundai Motor Group also saw its dividends of 10 listed affiliates rise 4.72 percent to 2.14 trillion won (US$1.89 billion) last year from 2.05 trillion won (US$1.80 billion) at the previous year. Notably, the group’s payout ratio increased 11.79 percentage points to 34.71 percent from 22.92 percent in 2017. This was because its net profits plunged 30.84 percent on-year from 8.93 trillion won (US$7.87 billion) to 6.18 trillion won (US$5.44 billion) and the group strengthened its shareholder return policy after Elliott Management proposals for dividend payouts.
The total amount of dividends paid by 11 listed affiliates under LG Group grew 15.67 percent on-year to 1.31 trillion won (US$1.16 billion) last year. The group also saw its net profits decrease from 7.89 trillion won (US$6.95 billion) to 6.19 trillion won (US$5.45 billion) over the same period but it increased its dividends. Accordingly, the payout ratio rose 6.84 percentage points from 14.40 percent to 21.24 percent.
In addition, POSCO Group’s five listed affiliates paid out 908.30 billion won (US$800.26 million) of dividends with 42.90 percent of payout ratio, while the amount of dividends paid by seven listed subsidiaries under Lotte Group recorded at 647.20 billion won (US$570.22 million) with 43.04 percent of payout ratio.
Hanwha Group saw its four listed affiliates pay out 185.30 billion won (US$163.26 million) of dividends and have 12.45 percent of payout ratio. The dividends and payout ratio of six listed subsidiaries of CJ Group recorded at 133.10 billion won (US$117.27 million) and 7.16 percent, respectively, paying out the least dividends among the top 10 business groups.