Woowa Brothers, the operator of the domestic delivery platform Baemin, has continued to transfer funds worth several hundred billion won to its German parent company. With the burden on self-employed merchants and riders growing, there are concerns that controversy over excessive dividends could flare up again.
On the 10th, according to the Financial Supervisory Service's electronic disclosure system, Woowa Brothers disclosed through its consolidation audit report that it purchased and canceled treasury shares worth 490 billion won held by its German parent company Delivery Hero (DH) last year. That was down 8.8% from the previous year.
Share buybacks and cancellations are one form of shareholder returns. By reducing the number of shares outstanding to raise per-share value, they can seek shareholder gains. However, when the structure involves purchasing equity held by a major shareholder, it effectively results in a cash transfer to the parent company.
Woowa Brothers has expanded dividends to its parent company in recent years on the back of improved results. In 2023, it paid dividends for the first time, totaling 412.7 billion won. At the time, it faced criticism that the payout was excessive, amounting to nearly 60% of operating profit of 699.8 billion won.
In 2024, it purchased and canceled treasury shares worth 537.2 billion won from the parent company. It is seen as choosing an indirect route of share buybacks and cancellations in response to public criticism of direct cash dividends.
Woowa Brothers has maintained the No. 1 position in the domestic delivery platform market and continued to grow in scale. The company's sales on a consolidation basis last year reached 5.283 trillion won, up 22.2% from the previous year (4.3226 trillion won). Services that strengthened customer benefits, such as Hangureut and Baemin Club, won a positive response from consumers, and steady growth in quick commerce businesses such as B Mart drove overall revenue growth. Woowa Brothers also analyzed that its strategy of strengthening delivery quality through continued investment proved effective.
Profitability, however, deteriorated. During the same period, operating profit was 592.9 billion won, down 7.5% from the previous year (640.8 billion won). Woowa Brothers cited an increase in operating expenses last year as one reason for the decline in operating profit. Operating expenses last year came to 4.6901 trillion won, up 27.4% from the previous year (3.6819 trillion won). The increase in operating expenses outpaced the growth in sales, leading to a decline in operating profit. In particular, outsourced service fees, which are labor-cost-like payments to riders within operating expenses, rose to 3.1542 trillion won last year, up 41% from the previous year (2.2369 trillion won).
Even as the expense burden grew last year, with large-scale dividends continuing, the company appears to have taken steps to increase rider labor-cost spending in response to criticism from some quarters. After it disclosed the size of the 2023 dividends and the 2024 treasury share buybacks and cancellations, concerns emerged among self-employed merchants complaining about delivery fees and advertising costs and consumers facing pressure from higher delivery charges that the platform's profits might be transferred overseas.
In fact, in political circles, after last year's large dividends, there were criticisms that reinvestment in stakeholders, such as support for self-employed merchants and improving rider treatment, was needed.
In October last year, at the National Assembly's Trade. Industry Energy. SMEs. and Startups Committee audit, Chief Executive Officer Bum Seok Austin Kim of Woowa Brothers, who was summoned as a witness, faced criticism from ruling and opposition lawmakers over unfair operations, shifting costs to small merchants, and monopolistic practices in the platform industry. A Woowa Brothers official described the treasury share buybacks and cancellations as "part of a shareholder return policy."
Regarding the view that reinvestment in stakeholders is needed, Woowa Brothers said it carried out preemptive investments last year to expand partner (merchant) sales.
Woowa Brothers said it executed about 1.4 trillion won in investments targeting customers and merchants. Notably, it rolled out the "Hangureut" service, which allows orders without a minimum order amount; rebranded the takeout order service "Pickup"; and pushed a large-scale promotion, "Baemin Food Festa." It said that while such investments increased short-term expenses, they actually led to higher merchant sales.
In the industry, there is a view that, amid intensifying competition with rivals such as Coupang Eats, continued free-delivery policies, and growing demands for mutual growth, large-scale overseas transfers of funds will be difficult going forward due to the heavier expense burden. At the same time, rising demands for the social responsibility of platform corporations are also cited as a factor.
An industry official said, "The scale of dividends (treasury share buybacks and cancellations) is expected to be lower than the previous year," adding, "Since the criticism last year, as the company has recently shown efforts to return profits to society or reinvest in the Korean market, the amount of money going to Germany will likely not be as much as before."