SEOUL – Kakao, South Korea’s second largest internet company, is aiming for further growth this year after turning to profit in 2020, thanks to strong growth in the e-commerce and e-commerce industries. his online game among the pandemic.
The company posted a full-year net profit of 167.1 billion won ($ 149.8 million), up from a net loss of 341.9 billion earned in 2019.
For the fourth quarter alone, Kakao’s operating profit jumped 88% year-on-year to 149.8 billion won ($ 134.4 million), as sales rose 46% to 1.2 trillion earned.
However, Kakao posted a net loss of 201.8 billion for the quarter as a result of a one-time loss of 454 billion won in connection with the write-down of the company of their music streaming service, Melon, in response to a change in payment rules. The government has raised the amount that music streaming services creators have to pay to 65% of revenue, from 60% in 2019. Streaming services cannot offer discounts to consumers for bundled downloads, starting this year.
The company has set high targets for this year, hoping to expand revenue from their KakaoTalk chat app by 50%.
“I know it’s challenging but we can reach the goal, considering the expansion move,” Kakao CEO Yeo Min-soo said during Tuesday’s job call. “Our number of e-commerce users is also similar to or greater, compared to other platforms. We expect the industry to become more competitive, as we have added to the luxury product line.”
Analysts say Kakao’s plans to list two affiliates this year will help boost its own value. Kakao is listed on the benchmark Kospi index and has earned a market capitalization of 41.1 trillion.
“IPOs of Kakao Bank and Kakao Pay are scheduled for the first half of the year. We predict that the revaluation of Kakao will continue,” said Choi Jin-seong, an analyst at Cape Research.
The news of Kakao’s strong earnings comes one day after the board’s founder and chairman, Kim Beom-su, said he would give more than half of his wealth to society. Kim is the largest shareholder in Kakao, with a share of 14.2%. He is also the owner of K Cube Holdings, a No. 2 shareholder, which owns a share of 11.3%.
“I decided to devote more than half of my wealth during my lifetime to solving social problems,” Kim said in a message to Kakao employees. “I thought I shouldn’t wait any longer, because I see a lot of problems in different areas becoming more dangerous in these fast-changing times.”