South Korean operator of the Japanese fashion giant Uniqlo, FRL Korea, has announced substantial dividends for the second consecutive year, with dividends surpassing the company's net profit for the 2022 fiscal year by 52.8 billion won ($40 million).

According to the Financial Supervisory Service's report Monday, FRL Korea distributed 180 billion won in dividends for the 2022 fiscal year. In the 2021 fiscal year, the company allocated 140 billion won in dividends, exceeding its net profit by 50.9 billion won. The recipients of these dividends are Uniqlo's headquarters in Japan and Lotte Shopping.

The decision to issue dividends is particularly noteworthy, given that it occurred during a period when Uniqlo's performance in Korea has yet to fully rebound in the aftermath of the "No Japan" boycott.

The boycott started in July 2019, when Japan imposed an import ban on key materials essential for Korea’s chip and display manufacturing industry amid mounting historical tensions. The measure immediately led to a boycott of Japanese brands such as Uniqlo.

FRL Korea is a 51:49 joint venture between Japan’s Fast Retailing, the owner of the Uniqlo brand, and Korea’s Lotte Shopping, and was set up in 2004.

Of last year's total dividends, Fast Retailing received 91.8 billion won and Lotte Shopping, 88.2 billion won, respectively.

"The decision was made based on internal standards of the FRL Korea's board, so we are not privy to the specific details," an official from Lotte Shopping said Monday.

"Given that Japan's Fast Retailing holds a slightly larger stake in the share structure, I believe the board would have adhered more closely to their positions regarding the (dividends) payout. FLR Korea did not issue dividends during periods of poor performance, so this year is a clear indication of Uniqlo's evident recovery in performance (in Korea)."

Despite a significant drop in sales and operating profit in 2019, from 1.38 trillion won in 2018 to 629.8 billion won in 2019, the company managed to recover sales to 921.9 billion won last year. The recovery was accompanied by an operating profit of some 140 billion won and a net profit of approximately 120 billion won.

However, the company's debt also increased during the period of high dividends, rising from 145.1 billion won in August 2021 to 230.1 billion won in August this year.

Comparatively, FRL Korea's high dividends differ from those of other foreign companies renowned for such payouts.

When questioned on the rationale behind such a substantial dividend, an FRL Korea official responded that it was a decision of the board of directors, and therefore, cannot be disclosed to the public.