Starbucks Korea, one of the most lucrative overseas operations of the global coffee chain, has paid out a yearly cash dividend of total 40 billion won ($33.6 million) to its stakeholders for the first time in eight years, according to its disclosure.
Korea’s E-Mart, big-box store chain under the country’s retail conglomerate Shinsegae Group, and Starbucks Coffee International Ltd., a subsidiary of Starbucks, received 20 billion won each from Starbucks Coffee Korea.
In line with its blooming business in Korea, the unit paid its headquarters 78 billion won in royalties last year.
Starbucks Coffee Korea is a 50-50 joint venture between E-Mart and Starbucks Coffee International. Since the JV was founded in 1999 spearheaded by Shinsegae Group Vice Chairman Chung Yong-jin, it had paid out the yearly cash dividend only four times before last year - 6 billion won in 2005, 2 billion won in 2007, 2 billion won in 2009, and 3 billion won in 2010.
Under the trademark contract, it has to pay royalties worth 5 percent of its sales to the U.S. headquarters every year.
Market experts suspected that the sudden dividend payout by Starbucks Coffee Korea might have been made upon strong request by Chung in need of massive funding for the ongoing process to integrate Shinsegae Group’s online shopping malls. The dividend payout was also made amid rumors that E-Mart would not renew the contract with Starbucks after the Korean partner has not been satisfied with the dividend terms.
A company official, however, said it was only part of the company’s stakeholder friendly path, citing its sound financial status without borrowing for the past two years.
Starbucks Coffee Korea posted an operating profit of 142.8 billion won last year on sales of 1.52 trillion won, with net profit reaching 112 billion won. Its revenue was the third-largest among Shinsegae Group affiliates after E-Mart and Shinsegae Department Store and was bigger than Shinseae Food’s 1.26 trillion won and Shinsegae International’s 1.12 trillion won.
Its operating profit for the first three months this year also soared 47.7 percent on year to 34.7 billion won on sales of 429.7 billion won, up 26.7 from a year earlier.
By Kim Gi-jung and Lee Ha-yeon
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]