LG Corp. Taps Asset Sale Proceeds to Defend Dividend Amid Subsidiary Slump

[Korea Financial Times, Gwak Horyung] LG Corp., the holding company of LG Group, has maintained its dividend for the third consecutive year even as its subsidiaries posted lackluster earnings. The company plugged the gap left by reduced dividend income from affiliates with one-time non-recurring gains, including proceeds from asset sales, signaling a firm commitment to shareholder returns. The sustained payout is also expected to qualify the company for preferential tax treatment under the government's newly proposed "high-dividend company" scheme.

LG Corp. announced a total dividend of KRW 3,100 per common share for fiscal year 2025. The figure combines the interim dividend of KRW 1,000 per share paid in September last year and the year-end dividend of KRW 2,100 per share, which has cleared the board of directors and now awaits approval at the general shareholders' meeting.

With this, LG Corp. has held its per-share dividend steady at KRW 3,100 for three consecutive years since 2023.

The company launched its shareholder-friendly initiative in earnest in 2018, when Chairman Koo Kwang-mo took office. The per-share dividend, which stood at around KRW 2,000 at the time, has since expanded by 55%. LG Corp. has also drawn up a plan to use surplus cash — after dividends and investment outlays are excluded from net profit, stripping out one-time non-recurring gains — along with non-recurring income from asset and equity disposals to buy back treasury shares. All treasury shares acquired under this plan are scheduled to be fully cancelled within the first half of this year.

Shrinking Coffers Filled With Asset Sale Proceeds

In fiscal year 2025, LG Corp.'s net profit on a separate (parent-only) basis came in at KRW 814.5 billion, up 61% from 2024 and 13% higher than 2023. However, adjusted net profit on a separate basis — excluding non-recurring gains — declined 11% year-on-year. Despite the diminished recurring earnings capacity, the company maintained its total dividend payout by channeling KRW 100 billion from the proceeds of the Gwanghwamun Building sale to LX Holdings into its dividend fund.

LG Corp.'s operating revenue has been on a sustained downward trend: KRW 1,030.6 billion in 2023, KRW 931.6 billion in 2024, and KRW 885.0 billion in 2025. As a pure holding company with no independent business operations, LG Corp. derives its operating revenue from dividends received from affiliates, royalties for use of the LG brand (trademark), and rental income from real estate. Dividends account for the largest share at 44%, followed by trademark royalties (39%) and rental income (17%).

While trademark and rental revenues remain largely fixed from year to year, dividend income fluctuates with subsidiary performance. The declining trend in LG Corp.'s operating revenue is attributable to shrinking dividend receipts from affiliates — specifically, dividends received from chemical and consumer goods subsidiaries such as LG Chem and LG H&H (LG Household & Health Care) have fallen sharply over the past three to four years.

According to related-party transaction disclosures in LG Corp.'s business report, revenue generated from LG Chem — including dividends and trademark royalties — dropped 48% from KRW 359.7 billion in 2023 to KRW 187.4 billion in 2024, and is expected to decline further in 2025. LG Chem set its year-end dividend for fiscal 2024 at KRW 1,000 per share — down from KRW 3,500 per share in 2023, and a fraction of the KRW 10,000–12,000 per share paid in 2020–2022, when elevated payouts were made to appease shareholders following the physical spin-off of LG Energy Solution.

LG Group Affiliates Stake Everything on Share Price Recovery

Despite the downward earnings trend, LG Corp. is expected to continue its proactive shareholder return policy, including sustained dividends.
LG Electronics raised its dividend by more than 35% year-on-year even after posting a large-scale operating loss in the fourth quarter of last year, and announced its first-ever treasury share buyback program intended for cancellation, underscoring its resolve to prop up its share price.

Expectations for a turnaround in the chemical affiliates remain muted, though some analysts suggest the sector has bottomed out. LG Chem, which had been cutting its dividend through 2024, raised it back to KRW 2,000 per share for fiscal 2025. While distributable earnings have yet to recover, the company plans to secure the necessary funds through partial disposal of its LG Energy Solution stake and other means.

Set to Benefit From 'High-Dividend Separate Taxation' Regime

LG Corp. also appears poised to meet the eligibility criteria for the "high-dividend company separate taxation" scheme, which was announced for legislative notice earlier this year. Under this measure, dividend income from qualifying high-dividend stocks will be taxed separately from other comprehensive income at a reduced rate on a temporary basis for three years beginning this year.
To qualify as a high-dividend company, a firm must satisfy all of the following conditions: listed on the KOSPI or KOSDAQ; dividend not reduced compared to 2024; and a payout ratio of at least 40%, or at least 25% with a year-on-year dividend increase of 10% or more.

The payout ratio refers to total dividends as a proportion of net profit, which is expected to be calculated on a consolidated basis.

LG Corp.'s consolidated net profit attributable to controlling shareholders for fiscal 2025 stands at KRW 737.2 billion, with total dividends to be paid amounting to KRW 478.2 billion — unchanged from the prior year. This implies a payout ratio of 64.9%, satisfying the high-dividend company threshold.

Meanwhile, LG Corp.'s founding family holds a combined stake of approximately 42%, including a 15.96% direct shareholding by Chairman Koo Kwang-mo. Last year, U.K.-based asset manager Silchester International Investors raised its stake from the 5% range to the 7% range, becoming the company's second-largest shareholder. As the LG Group's holding company, LG Corp. controls LG Electronics (31.89%), LG Chem (31.5%), LG H&H (30.6%), LG Uplus (38.3%), and HS Ad (35%).

Gwak Horyung (horr@fntimes.com)