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Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] Namyang Dairy Products has pledged aggressive shareholder return policies, including a sharp increase in dividends and continued share buybacks and cancellations, though concerns remain over the sustainability of such measures.
According to regulatory filings on April 7, the company spent approximately KRW 32.3 billion and KRW 27.9 billion on treasury share purchases over the past two years, while canceling 1.2 million common shares worth about KRW 73 billion. Shareholder return initiatives have accelerated since Hahn & Company acquired management control in early 2024.
At its recent annual general meeting, Namyang approved a total dividend of KRW 11.3 billion for the previous fiscal year. This includes a regular dividend of about KRW 3 billion and a special dividend of approximately KRW 8.3 billion tied to compensation funds related to prior management misconduct. The payout represents more than a 12-fold increase from the previous year, with a dividend payout ratio of 158.61%.
The company also reaffirmed its commitment to maintaining high dividend levels and plans to cancel all newly acquired treasury shares within one year. In March, it signed a trust agreement to repurchase an additional KRW 20 billion worth of shares, to be completed by mid-July.
Despite these commitments, questions remain over whether Namyang’s cash generation can sustain the pace of shareholder returns. The company reported operating cash flow of approximately KRW 26.9 billion last year—below the KRW 27.9 billion spent on share buybacks. Its year-end cash balance also declined from KRW 85.3 billion to KRW 42.1 billion.
While the company retains sufficient distributable reserves, the speed of cash outflows is a growing concern. Combined spending on dividends and buybacks this year is expected to exceed KRW 20 billion.
Analysts note that the sustainability of Namyang’s shareholder return policy will ultimately depend on its ability to improve earnings. Although the company returned to profitability last year with operating profit of KRW 5.2 billion, revenue declined 4% year-on-year to KRW 914.1 billion, indicating that top-line recovery remains in progress.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
