Pernod Ricard Korea's KRW 40.8 billion Dividend Sparks Controversy As Sales Plummet from KRW 175.1 Billion to KRW 120.7 Billion

Pernod Ricard Korea's net profit plummet from KRW 40.9 billion to KRW 5.7 billion, an 86% drop
PRK spent KRW 24 billion in related-party transactions and KRW 4.6 billion in headquarters expenses
Industry insiders: "The Korean market has been reduced to a cash cow."

[Photo=Fadil Tashkin, CEO of Pernod Ricard Korea]

[Green Economic Daily = By Han Soon Gu, Cho Chang Woo, Rhyu Jain ] According to an audit report, Pernod Ricard Korea, the Korean subsidiary of the global liquor company Pernod Ricard Group, paid out a massive dividend of over 40 billion won last year despite a sharp decline in sales and net profit. This led to criticism within Korea, accusing the company of using the Korean market as a mere cash cow.

■ Sales down by 30%, while net profit is down by 86%… Operating profit falls from 53 billion won to 15 billion won

According to Pernod Ricard Korea's recent audit report, sales between July 2024 to June 2025 amounted to 120.7 billion won, a 31% decrease from 175.1 billion won in the previous quarter.

Operating profit fell from 53 billion won to 15 billion won (-72%), while the net profit fell from 40.9 billion won to 5.7 billion won (-86%), which resulted in most of its profits effectively evaporating.

Selling, general, and administrative expenses decreased from KRW 80 billion to KRW 68.6 billion, but the decline in sales was not enough to keep pace with the decline in sales, making an inevitable deterioration in performance.

[Photo=The ABSOLUT vodka line, sold by Pernod Ricard Korea]

■ KRW 40.8 billion cash dividend despite plunging performance… Dividend payout ratio of 98.3%

However, the company has shockingly paid a dividend of KRW 40.8 billion despite such deterioration in performance.

According to the audit report, dividends to be paid in 2025 amounted to around KRW 40.9 billion while dividend payout ratio as a percentage of net income amounted to 98.3%.

This shows that most of the profits were remitted to Pernod Ricard Korea's overseas parent company, Pernod Ricard Asia.

An accounting expert pointed out, "With a net income of KRW 5.7 billion and a dividend exceeding KRW 40 billion, there is little room for independent growth for the Korean subsidiary. The parent company's primary objective is to recover cash."

According to the audit report, Pernod Ricard Korea makes large-scale purchases and payments to related parties (Chivas, Absolut, Irish Distillers, etc.) every year.

The acquisition of CHIVAS BROTHERS INTERNATIONAL amounted to KRW 17.2 billion, while the acquisition of Absolut affiliates amounted to KRW 3.4 billion, and the cquisition of Irish Distillers affiliates amounted KRW 3.4 billion.

When acquisition and consignment costs for other overseas affiliates were taken into account, this came to a total of KRW 24-26 billion.

A further KRW 4.6 billion in advertising, marketing, and management expenses claimed by the headquarters (Pernod Ricard Holding) were also incurred annually.

Industry insiders state, "Even if the Korean subsidiary's profits decline, the headquarters' claims remain unchanged," and that the structure is not free from controversy over profit transfer pricing.

■ Cash and cash equivalents decreased from KRW 45.4 billion to KRW 16.7 billion... "High dividends are depleting the Korean subsidiary's funds"

According to the cash flow statement, the company's cash and cash equivalents decreased by 63%, from KRW 45.4 billion to KRW 16.7 billion. Cash flow from operating activities also decreased from KRW 40.4 billion in the previous quarter to KRW 8.5 billion.

The audit report states that dividend payments were the largest cause of the cash outflow.

A financial expert stated, "With such a significant decline in cash reserves, future sales and marketing investments are likely to be curtailed," adding, "Internal liquidity risks must be considered as well."