KT posts Q2 profit drops on pay raises, bonus payments
Ju-Hyun Lee
8 HOURS AGO
KT Corp., South Korea’s No. 1 telecom service provider, on Friday reported a 14.3% drop in second-quarter operating profit despite steady revenue on the back of pay raises and bonus payments.
In collective wage bargaining in July, it agreed to a 3.5% rise in basic salaries and paid a one-off bonus of 3 million won ($2,200) to each employee. Last year, it raised its basic salaries by 3%.
Its consolidated operating profit came in at 494.0 billion won ($363 million) in the quarter ending in June, down 14.3% on-year. Net profit decreased 5.1% on-year to 410.5 billion won.
In the quarter, it booked 64.4 billion won as expenses for the pay hikes, including expenses not paid during the bargaining period.
The remaining 53.6 billion won of expenses related to the pay raises will be reflected in the third and fourth quarters of this year, KT’s Chief Financial Officer Jang Minx said on an earnings conference call on Friday.
Excluding the lump sum payments, its operating profit slipped 3.1% in the second quarter, broadly in line with market expectations of a 4% decline.
In 2023, it reflected the annual pay increase in the third quarter in a lump sum payment.
Revenue stood at 6.55 trillion won in the second quarter, remaining at its highest revenue for a second quarter since 2010.
By division, revenue of internet services edged up 1% on-year thanks to a rise in internet protocol TV subscriber numbers.
KT's headquarters in Seoul KT is transforming into a business-to-business service company as its mainstay telecom services have been on the decline.
Its cloud, data center and property service units shored up KT's earnings in the second quarter. KT Cloud Co. and KT Estate Co. saw revenue up 27.1% and 7.1%, respectively.
By contrast, its content platforms such as Studio Genie, payment processing company BC Card and Skylife TV Co., South Korea's only satellite broadcaster, suffered single- to double-digit falls in revenue.
As part of business restructuring, KT has sold a stake in digital logistics service platform KT Rolllab and withdrew from Vietnam’s healthcare market, while wrapping up its blockchain service.