Naver’s sales surpass W6tr but profits down in 2019

Naver’s annual sales surpassed the 6 trillion won ($5.06 billion) mark for the first time in 2019, but its operating profit decreased due to the sluggish performance of Line and related platforms, according to a regulatory filing on Thursday.

The South Korean internet giant’s annual sales totaled 6.59 trillion won, marking an 18 percent increase. The figure is four times greater than that of 2015, 3.25 trillion won.

However, Naver’s operating profit fell to 710 billion won, down from 942 billion won in 2018. The decrease was largely due to the 537 billion won operating loss from the unit that operates the company’s Japanese platform Line.

Line and related businesses also contributed to a net loss of 140 billion won in 2019. The total net profit of Naver in 2019 marked 396.8 billion won, down 36.8 percent from 628 billion won last year.

Line’s performance suffered due to vast investments in its new business ventures, such as the launch of a mobile payment service. In May last year, the company launched a 30 billion yen ($275 million) reward campaign for Line Pay service to increase its foothold in the Japanese market. Actual marketing expenses for its payment service were expected to surpass 6 billion yen.

Line’s earnings will be deconsolidated from Naver’s performance after the management merger between the unit and SoftBank’s internet subsidiary Yahoo Japan this October.

Naver’s business platform led the company’s quantitative growth, marking 2.85 trillion won in sales, a 15.2 percent increase compared with a year earlier.

Annual sales of Naver’s advertising business rose to 633 billion won, up 10.5 percent compared with 2018, while its IT unit recorded a 28.6 percent increase in annual sales to reach 457 billion won in 2019.

Naver’s online content business, which operates webcomic services and V Live, marked the most dramatic sales growth last year. Backed by the platforms’ expansion in the global market, annual sales of the content services increased by 66.6 percent to 209 billion won.

Line’s sales marked 2.4 trillion won, an 18.8 percent increase year-on-year.

In the fourth quarter alone, Naver logged 1.7 trillion won in sales, a 17.9 percent increase year-over-year. Its operating profit fell 18.7 percent to 173 billion won.

By Shim Woo-hyun (ws@heraldcorp.com)