[Listed Companies at a Crossroads] Cherrybro (2): As the listed company halted dividends, Kim Kangheung alone pocketed 11 billion won in dividends

Cherrybro Paid No Dividends for 7 Years... Owner's Company, Grown Through Internal Transactions, Kept Paying Dividends
While Cherrybro Was in the Red, Vice Chairman Kim Kangheung Took Dividends Without Accepting Responsibility

Kim Kangheung, Vice Chairman and CEO of Cherrybro

Kim Kangheung, CEO and Vice Chairman of Cherrybro, which operates the Cheogatjip Seasoned Chicken brand, has reportedly received annual dividends through a family-owned company. The payments are likely to draw criticism because Kim received dividends every year from the unlisted holding company even as Cherrybro, a listed company, was unable to return capital to shareholders for years amid deteriorating earnings.

According to the Financial Supervisory Service's electronic disclosure system on Nov. 12, Cherry B Holdings (formerly Korea Ilosam) paid approximately 11 billion won in dividends over the 10 years from 2016 to 2025. It paid dividends every year without a single interruption during that period.

Cherry B Holdings operates the chicken franchise Cheogatjip Seasoned Chicken. It is the top-tier holding company overseeing 12 affiliates, including Cherrybro, a KOSDAQ-listed company, Korea Ilosam, Korea Wonjong and Gyeyoung Logis.

Kim Kangheung, CEO and Vice Chairman of Cherrybro, is the largest shareholder of Cherry B Holdings. The son of Cherrybro founder and Chairman Kim Insik, Kim Kangheung holds a 62.59% stake in Cherry B Holdings. The remaining shares are held by related parties Kim Hwayoung (8.82%), Cherrybro (5.04%) and the company itself (23.56%).

Since no dividends are paid on treasury shares, the Kim family is estimated to have received most of the dividends. Cherry B Holdings previously repurchased treasury shares worth 10.1 billion won in 2022 and 10.7 billion won in 2024. As a result, the owner family's effective share of the dividends rose from 76.1% to as much as 93.4%.

Cherry B Holdings has been able to pay dividends every year thanks to its stable profit margins. Its operating margin has remained between 11% and 16% over the past 10 years. It has generated high profits by securing a stable supply of chicken meat and raw materials from Cherrybro. About 70% of Cherry B Holdings' cost of sales came from Cherrybro.

Cherrybro, by contrast, has been unable to pay dividends for several years. The company was listed on the KOSDAQ market in December 2017. After paying about 1 billion won in dividends in the year it went public and about 400 million won in 2018, it froze dividends at zero for seven consecutive years through 2025. It also did not repurchase any shares.

Cherrybro stopped paying dividends because of weaker performance and accumulated deficits. The company recorded large operating losses, including 14.5 billion won in 2019 and 25.7 billion won in 2020. In 2022, the Fair Trade Commission also imposed a 17.9 billion won fine for collusive practices.

Even in years when Cherrybro posted losses, the Kim family received dividends through Cherry B Holdings. When Cherrybro was operating at a loss, founder Kim Insik was its CEO and oversaw the company's management. Kim Kangheung, then known as CEO Kim, also worked at Cherrybro in roles including executive director, vice president and vice chairman, overseeing internal strategic planning and business operations. This has prompted criticism that the family collected dividends through its own company while shirking responsibility for management failures.

A Cherrybro representative said, "Immediately after the listing, we paid differential dividends, excluding the largest shareholder and related parties. Since then, however, we have been unable to pay dividends due to our performance and financial condition. After posting a profit last year, we approved a quarterly dividend of 50 won per common share on Oct. 20, alongside the disclosure of a plan to improve our PBR (price-to-book ratio). Going forward, we will decide on shareholder returns in consideration of our business conditions." The representative added, "Cherry B Holdings' dividends and treasury share purchases are matters for that company, so it is difficult for us to comment."

This content was produced with the assistance of AI translation services.