Hanil Cement's operating profit is expected to drop more than 40% this year. Net profit is forecast to be about half of last year's level. The decline stems from lower sales due to a slump in the construction market and rising fixed costs. In the financial investment industry, there was even a projection that "a rebound in shipments will be difficult until 2026." The average operating rate for some products has fallen into the 20%–30% range. That means only 20%–30% of the total producible product volume is being shipped.
In this situation, Hanil Cement said it would pay out 70% of annual profit as dividends, drawing criticism in some quarters as "excessive dividends for the largest shareholder." The view is that, instead of building reserves to prepare for a prolonged downturn or investing in new businesses as new growth engines, the money is being put into shareholders' pockets.
On the Korea Exchange on the 29th, the ex-dividend date, Hanil Cement shares fell more than 5%, and foreign investors sold more than 100,000 shares. The ex-dividend date is the day on which the right to receive dividends disappears, usually one day before the record date. Investors who hold shares through the day before the ex-dividend date can receive dividends, but from the ex-dividend date onward, shareholders are not entitled to that year's dividends even if they hold the stock.
◇ Operating profit forecast 110.9 billion won, down more than 40% on-year
According to financial data provider FnGuide on the 30th, the consensus (average forecast) for Hanil Cement's operating profit this year is 160.5 billion won. Considering it posted 271.4 billion won in operating profit last year, analysts say operating profit will plunge 110.9 billion won (40.8%) in one year. Over the same period, net profit is expected to fall 96.5 billion won (48.4%) from 199.0 billion won to 102.5 billion won.
The main reasons cited for the deterioration in profitability are rising fixed costs and weak demand due to the industry downturn. According to BNK Investment & Securities, shipments of key products fell sharply through the third quarter (end of September). By product, cement fell 10.4% to 6,919,000 cubic meters (㎥) from the same period a year earlier; ready-mixed concrete, a concrete specialty product, fell 20.6% to 1,579,000 cubic meters (㎥); and remital, a product mixing cement and sand, also saw shipments drop more than 20% to 2,405,000 cubic meters (㎥) (-27.0%).
With shipments declining, the average operating rate also fell sharply. The average operating rate is the ratio of actual shipments to a company's total production capacity. Through the third quarter, cement's average operating rate fell 6.7 percentage points to 58.3% from 65.0% a year earlier, and ready-mixed concrete declined from 28.7% to 22.8% over the same period. Remital also plunged from 42.8% to 31.4%. Shin Dong-hyun, a researcher at Hyundai Motor Securities, said, "As pre-sales (including apartment complexes) increase slightly in the second half of 2025, construction starts could rebound, but considering the time lag between groundbreaking and the shipments of ready-mixed concrete and cement, it will be hard to expect a meaningful rebound in shipments until 2026."
◇ Pay out 70% of net profit as dividends, stock plunges on ex-dividend date
In the market, there are concerns that the company significantly raised its payout ratio amid an "earnings shock"-level deterioration in conditions.
On the 16th, Hanil Cement announced it would pay 1,000 won per common share as a settlement of account dividend for 2025. The total dividends amount to 73.1 billion won. The dividend amount is the same as last year. However, with profit expected to fall sharply, the payout ratio is likely to spike. The company would have to pay out an amount equal to 45.5% of the operating profit forecast and 71.3% of the net profit forecast as dividends. Of the dividends, 75.75% (52,464,952 shares) will go to the largest shareholder Hanil Holdings and related parties.
Seo Ji-yong, a professor of business administration at Sangmyung University, said, "If the largest shareholder and related parties raise the payout ratio to receive more dividends even as results deteriorate, it can reduce internal reserves and constrain investment, creating a vicious cycle that further erodes profit."
As the payout ratio was raised even with profits expected to plunge, keeping the dividend amount at last year's level, stock volatility also increased. On the 29th, the ex-dividend date, Hanil Cement shares tumbled 5.08% (980 won) from the previous day to as low as 18,300 won. Market capitalization shrank by 72.0 billion won in a single day. Foreign investors sold 100,400 shares (1.8 billion won) that day. In the market, the stock effectively became a target for investors who collect dividends and then sell.
There is also an opinion that to improve the tendency of the largest shareholder to seek dividends regardless of corporate performance, Korea should consider introducing a differential dividend system that reduces dividends to the largest shareholder. Lee Jun-seo, a professor of business administration at Dongguk University, said, "If the largest shareholder holds more than 50% equity, measures such as a differential dividend system under which they receive less than minority shareholders should be considered, so that corporations' sound management activities are ensured while allowing more of the company's profits to flow to minority shareholders."