April 29, 2024

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[THE INVESTOR] Web portal operator Naver on Oct. 25 pledged to increase investments to find new growth engines as it faces fierce competition from rivals in the US and China, such as Google and Tencent.

“The global internet sector is borderless, so Naver’s operations are affected one way or another by investments and strategies of other global rivals,” said Choi In-hyuk, executive vice president of the Korean firm’s business committee, in a conference call.

“We have to keep investing, despite a possible profit margin decline, and a sharp drop in the company’s stock price, to expand our global operations for survival.”

Market concerns have been rising recently with the company’s shares having dropped more than 30 percent compared to an annual high recorded in January.

The operating profit, which came in at a record 312 billion won (US$274 million) in the third quarter last year, has decreased for four consecutive quarters until the July-September period. The operating cost, on the other hand, has constantly increased from 888 billion won to 1.1 trillion won during the same period

The firm said it made a total investment of 270 billion won in the third quarter, almost twice as much as it spent in the second quarter. Nearly 200 billion won was poured into overseas projects, including in China, North America and Southeast Asia.

In the fourth quarter, it plans to make new investments in joint ventures in the Southeast Asian financial sector through its subsidiary Line, whose mobile messenger service has been garnering popularity.

Touching upon financial services, the Naver executive said the company will roll out new services in addition to its existing online and mobile payments, money transfer and stock trading account services. He said, however, nothing has been decided over the company’s entry in the internet-only banking industry.

As the Korean authorities are trying to relax regulations on internet-only banks, more participants, including those in non-banking sectors and conglomerates, are expected to jump on the bandwagon.

According to its third-quarter earnings report, Naver raked in 221.7 billion won in operating profit in the third quarter this year, down 29 percent from a year earlier, while its revenue came in at 1.4 trillion won, up 16.4 percent on-year.

By Kim Young-won (wone0102@heraldcorp.com)