SK hynix Announces 25% Hike in Dividend in New Shareholder Return Program

Rhea-AI Summary

SK hynix announced a new shareholder return program for 2025-27, increasing its annual fixed dividend by 25% to 1,500 won per share from 1,200 won. The total cash dividend is expected to reach 1 trillion won annually. The company will maintain its policy of allocating 50% of accumulated free cash flow for shareholder returns and set aside 5% for financial structure enhancement. Additionally, SK hynix introduced a 'Value Up' initiative that includes Capex Discipline, maintaining annual investment at mid-30% of revenues. The company aims to balance shareholder returns with financial soundness while strengthening its position in AI memory.

Positive

• 25% increase in annual fixed dividend to 1,500 won per share
• Total cash dividend expected to reach 1 trillion won annually
• 50% of free cash flow allocated to shareholder returns
• Potential for additional shareholder returns if financial targets are met by 2027
• Company projecting all-time high financial results for current year

Negative

• 5% of free cash flow diverted to financial structure enhancement
• Continued volatility expected in memory business
• Investment spending capped at mid-30% of revenues

• Annual fixed dividend to rise 25% to 1,500 won a share, according to shareholder return program for 2025-27
• Separate "Value Up" plan stipulates capex discipline to maintain scale of investment at appropriate level
• New plans aimed at bringing shareholder a return that matches company's growth, while keeping financial structure stable

SEOUL, South Korea, Nov. 27, 2024 /PRNewswire/ -- SK hynix Inc. (or "the company", www.skhynix.com) announced today a new program on shareholder return for the 2025-27 period and the "Value Up" plan aimed at boosting corporate value.

According to the new shareholder return program, SK hynix will maintain the existing principle of allocating half of the accumulated free cash flow for resources for shareholder return, while raising the annual fixed dividend (minimum dividend per share that SK hynix plans to pay out every year) by 25% to 1,500 won a share from 1,200 won.

With the hike in the dividend, total amount of the cash dividend is forecast to grow to 1 trillion won annually.

The move is aimed at meeting the expectations of the shareholders who have helped SK hynix overcome difficulties and challenges and advance to a leading global AI memory provider.

Despite an expected continuity of a volatile memory business, SK hynix will make its utmost efforts to protect corporate value by pursuing a balance between shareholder return and financial soundness.

For this, the company established specific targets for financial soundness such as net cash* and optimal cash level**, while deciding to put aside 5% of the free cash flow for enhancement of the financial structure.

*Net Cash: a company's cash balance after liabilities are subtracted

**Optimal Cash Level: resources for annual investment aimed at preparing for future growth

SK hynix plans to proceed with an additional return to shareholders within the extent that its finances are maintained sound if its financial targets are met until 2027 when the three-year program comes to an end. It will also review the possibility of an early return to shareholders prior to the expiration of the program if a better-than-expected business performance brings a meaningful increase in the level of free cash flow.

Separately, SK hynix also introduced its "Value Up" initiative aimed at bringing corporate value a notch higher.

The Capex Discipline from the plan stipulates that total amount of annual investment has to stay at an average mid-30% range, compared with the revenues to ease uncertainties of the future and enable a quick decision making in accordance with market conditions to eventually generate a stable flow of cash.

The two plans come at a time when SK hynix prepares to make its leadership in the AI memory space more concrete by establishing a desirable technology roadmap for future amid diversifying customer demands and an increasing portion of premium products in the full-fledged AI era.

Kim Woohyun, Vice President and Chief Financial Officer, said that SK hynix's corporate value has risen sharply after successfully weathering a downturn amid growing optimism that it will report this year all-time high financial results well above those during a super cycle in 2018.

"Our goal is to promote the company's long-term prosperity together with our shareholders by carrying out the policies for shareholder return that matches the company's growth and stability of the financial structure," said Kim.

About SK hynix Inc.

SK hynix Inc., headquartered in Korea, is the world's top tier semiconductor supplier offering Dynamic Random Access Memory chips ("DRAM"), flash memory chips ("NAND flash") and CMOS Image Sensors ("CIS") for a wide range of distinguished customers globally. The Company's shares are traded on the Korea Exchange, and the Global Depository shares are listed on the Luxembourg Stock Exchange. Further information about SK hynix is available at www.skhynix.com, news.skhynix.com.

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SOURCE SK hynix Inc.

FAQ

What is SK hynix's new dividend amount for 2025-2027?

SK hynix's annual fixed dividend will increase by 25% to 1,500 won per share, up from 1,200 won.

How much of SK hynix's free cash flow goes to shareholders?

SK hynix allocates 50% of its accumulated free cash flow for shareholder returns.

What is SK hynix's expected total annual dividend payout?

The total cash dividend is forecast to reach 1 trillion won annually.

What is SK hynix's new Capex Discipline target?

SK hynix will maintain annual investment at an average mid-30% range compared to revenues.