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Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] As Dongwon Industries reviews a potential acquisition of a major shipping company, the growth roadmap it presented to shareholders just a year ago is facing renewed scrutiny. The company completed the absorption merger of Dongwon F&B in April last year, pledging to strengthen its global food business while expanding dividends. However, persistent market noise surrounding a possible acquisition of HMM has raised questions about the feasibility of those commitments and the consistency of its long-term strategy.
At the time of the merger, Dongwon Industries outlined a clear shareholder return package, including a phased increase in its dividend payout ratio to 20 percent, 25 percent, and eventually 30 percent, as well as the introduction of semiannual interim dividends. The measures were designed to reassure minority shareholders amid the group’s transition to a holding company structure. The company did pay an interim dividend last year as promised.
Financial performance has been solid. On a consolidated basis, Dongwon Industries posted revenue of KRW 9.58 trillion last year, up 7.15 percent year-on-year, while operating profit rose 2.85 percent to KRW 515.6 billion. Net profit surged 242 percent to KRW 388.6 billion, and net income attributable to controlling shareholders—the direct source of dividends—jumped to KRW 368.8 billion from KRW 75.3 billion a year earlier.
Despite the improved earnings, market observers say the company’s direction appears to be shifting. Since late last year, speculation has mounted that Dongwon Group could bid for HMM, South Korea’s largest shipping company. Dongwon Industries acknowledged in a regulatory filing on January 2 that it is “indeed interested” in acquiring HMM. On January 20, it added that it plans to commission an external valuation of its U.S. subsidiary StarKist.
While no decision has been made on a potential divestment, the market views the move as a preliminary step to assess financing capacity. Analysts estimate that acquiring the entire stake held by HMM’s major shareholders would require at least KRW 15 trillion.
StarKist, acquired by Dongwon Group in 2008, is the leading canned tuna brand in the United States. The company generated annual revenue of more than KRW 1 trillion last year, with operating profit exceeding KRW 100 billion, and held a 45.7 percent share of the U.S. tuna market as of 2024. The prospect of using one of the group’s most stable cash-generating assets to fund a shipping acquisition has intensified questions over Dongwon’s strategic priorities and long-term business direction.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
