Despite the drop in operating profit, BAT Korea has paid high dividends to its headquarters in the U.K., raising controversy.
According to a media outlet, "INEWS24," on July 5, BAT Korea allocated 14.9 billion won out of 15 billion won in net profit in 2017 to its largest shareholder, B&W Holdings. B&W Holdings is a company owned by BAT's British headquarters.
BAT Korea has continued high dividend policy even when its sales and operating profit have declined, raising concerns. BAT Korea posted 368.1 billion won in sales and 750 million won in operating losses last year. Sales fell 8 percent compared to 2017, and operating profit shifted to a loss from 38 million won in 2017.
"Although it is true that many foreign companies take huge dividends from their Korean branches, it is questionable that such a high dividend trend continues for a long time despite falling sales like BAT Korea," a market watcher said.
Some point out that the position of CEO of BAT Korea has become a "course that goes through for promotion" of BAT Group executives, and that he may be sticking to his high-dividend policy for his promotion, according to the media.
Meanwhile, BAT Korea turned out to be stingy with donations. Last year, BAT Korea executed 295 million won in donations. The amount is down 13 percent from 341 million won in 2017.
KT&G, on the other hand, executed 14.8 billion won in donations, up 40 percent, although its operating profit fell 11 percent in 2018 compared to 2017. Philip Morris Korea also saw its operating profit drop by 30 percent during the same period, but the donation amount remained around 1.7 billion won.
"It is true that the donations themselves, which are directly delivered to relief organizations, have decreased," a BAT Korea official said in response, adding, "However, donations such as human resources development are gradually expanding."
