April 25, 2024

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[THE INVESTOR] Credit card operator Samsung Card has earned 40 billion won (US$34.88 million) in dividends from Renault Samsung Motors in the first quarter, according to the automaker on June 30.

Last year, the local unit of French Renault Group gave out 61.8 billion won in dividends to Samsung Card which holds a 19.9 percent stake, according to the official audit report. Of the amount, the year-end dividend of 40 billion won was paid in the first quarter, according to the automaker on June 30. 

Samsung credit cards

The dividend payment has became a revenue source for Samsung Card, aiding it to record profit. Samsung’s credit card affiliate posted a net income of 113 billion won in the first quarter, up 10.7 percent on-year.

Last year, RSM gave out its entire net income of 310.4 billion won as dividends –- marking a payout ratio of 100 percent. French Renault Group, with 79.9 percent stake in the carmaker, reaped 248 billion won in dividends.

“Renault Group centrally manages the profits from all its affiliates to minimize the exchange rate and political risk,” a RSM spokesperson told The Investor.

In recent years, RSM’s payout ratio has increased significantly as the carmaker posted stellar sales, thanks to popularity of SM6 sedan and QM6 SUV. In 2014, the carmaker paid 32.7 billion won in dividends, a payout-ratio of 16.66 percent, and increased it to 140 billion won in 2015, a payout-ratio of 55.73 percent.

In 2012 and 2013, RSM was unable to pay any dividends as it suffered a net loss.

Besides hefty dividends, RSM has been paying billions of won to Samsung Group for using its logo since 2000, when the Renault Group acquired the financially struggling Samsung Motor. The carmaker has paid 0.8 percent of its domestic profits from cars produced at the automaker’s Busan plant as royalty fees. Last year, Samsung Electronics raked 18.7 billion won as royalty payment from the automaker.

Despite growing speculation that RSM is likely to ditch the Samsung logo when the loyalty contract is set to expire in 2020, the carmaker has denied such claims, saying there are more benefits in using the logo in Korea.

By Ahn Sung-mi (sahn@heraldcorp.com)