Cheil Industries Inc., the de facto holding company of South Korea's top conglomerate, Samsung Group, decided Friday to make an investment of more than 400 billion won ($356.2 million) this year instead of paying out a dividend.
The decision came during the shareholders meeting earlier in the day, which was held in private. The company, whose mainstay businesses include fashion and resort management, got approval from shareholders to use its earnings as this year's capital expenditure, it said in a press release.
Yoon Joo-hwa, the chief executive of Cheil Industries' fashion division, said the company gave careful consideration to a dividend payout before it made the decision, which is aimed to bolster its competitiveness.
"Investment needs funding, either internally or from outside.
Given our current financial conditions, we thought it was best to turn the net profit into investment," Yoon said, adding that the company will make every effort to be able to offer shareholders a dividend payout next year.
Cheil Industries, formerly known as Samsung Everland Co., is said to be the key affiliate for the Lee family that owns Samsung to make a generational change in the leadership to Lee Jay-yong, the only son of Samsung chairman Lee Kun-hee, who's been bedridden since last May after suffering a heart attack.
The Lee family has run the conglomerate through a cobweb-like cross-shareholding structure. Cheil Industries holds a 20 percent stake in Samsung Life Insurance Co., another key financial unit, which stands as a major shareholder in the group's flagship affiliate, Samsung Electronics Co. The elder Lee and his three children together own a 45.56 percent stake in Cheil Industries, of which the value is estimated at some 7 trillion won.
Cheil Industries, which debuted on the Seoul bourse in December with a big market clamor, is now the 10th-largest firm in terms of market capitalization, reaching 20.9 trillion won as of Thursday. (Yonhap)