SM Entertainment Reports Growth in Income
SM Entertainment, the home of K-POP acts such as NCT 127, EXO, RIIZE, and AESPA, announced a 9% year increase in income, breaking a trend of uneven growth over the past year.
In its income report for the fourth quarter of 2024, released on Monday (February 10), the company reported an income of KRW 273.8 billion (195.94 million US dollars at the average exchange rate per quarter).
Operating Profit and Shareholder Returns
The company’s operating profit surged by 275.6% year to KRW 33.9 billion (24.26 million dollars), attributed to an increase in income, changes in sales mix, and a redistribution of compensation based on efficiency.
However, net profit remained in the red, though the net loss for the fourth quarter was KRW 24.1 billion (17.25 million dollars), which is less than half of the losses reported a year earlier, which were KRW 52.8 billion.
In a bid to enhance shareholder returns to 100%, the company announced that all remaining shares purchased during the recent buyback will be retired.
A total of 460,000 shares will be retired, accounting for 2% of outstanding shares and valued at KRW 40.3 billion (27.8 million dollars), as stated by co-CEO So Young-June during the shareholder presentation.
“In February and August, we retired treasury shares worth 35 billion KRW, which led to a total shareholder ratio exceeding 80%. With the redemption of treasury shares, the total shareholder return ratio reaches 100%,” he noted.
SM Entertainment closed the day at 5.4% up at KRW 92,300 ($ 63.61).
SM reports its income from the parent company and subsidiaries. The parent company saw a 11.0% year increase in income to KRW 181.8 billion (130.1 million dollars).
Meanwhile, there was a 5.1% year decrease in recorded income from music (both digital and physical), totaling KRW 86.0 billion (61.54 million dollars); however, this was more than compensated by an 88.2% year growth in concert revenue, reaching KRW 22.5 billion (16.1 million dollars).
SM attributed this increase in concert revenues to an expanded tour schedule for its K-Pop artists, which have gained popularity across East Asia, Southeast Asia, and globally.
Highlighting specific growth drivers, financial director Jang Jun-Min noted the NCT Dream World Tour 2024, which concluded in the fourth quarter with a performance in Europe and the final show in Seoul. He also mentioned NCT Doja 12 shows in Japan and TVXQ!‘s 20th anniversary concerts in Japan, all of which sold out upon ticket release.
The increased number of live performances also contributed to a rise in merchandising and licensing revenue, which jumped 51.9% year to KRW 51.2 billion (36.64 million dollars).
Operating profit grew by 83.2% year to KRW 35.8 billion (25.62 million dollars), while net income turned positive at KRW 8.3 billion (5.94 million dollars), compared to a net loss during the same quarter last year.
In its subsidiaries, SM Entertainment has experienced a 4.1% year increase in income to KRW 135.4 billion (96.9 million dollars), with operating losses narrowing to KRW 2.1 billion (-1.50 million dollars), down from KRW 8.2 billion a year earlier.
Net losses also decreased to KRW 48.7 billion (-34.9 million dollars), compared to losses of KRW 53.7 billion a year earlier.
The artist management, merchandising and licensing, and television aspects, particularly through Key East, saw a significant income increase of 110.0% year to KRW 21.0 billion (15.0 million dollars), attributed to an increase in television drama production.
SMC, the company responsible for K-POP culture in Japan, saw a remarkable income jump of 65.7% year to KRW 20.2 billion (14.46 million dollars), which SM attributes to increased engagement in the Japanese market.
This was partially offset by a 21.7% year decrease in income from the talent agency, television company, and tourism firm SM C & C, totaling KRW 33.4 billion (23.9 million dollars).
During the shareholder presentation, CEO Jang Cheol-Kyuk emphasized the celebration of SM Entertainment’s 30th anniversary, highlighting the company’s new motto: “Culture, Future.” He also discussed SMTown, a series of concerts commemorating the founding of SM in 1995.
The first of these anniversary concerts took place in Seoul during the Lunar New Year last month and was accompanied by a television special celebrating the milestone. Additional SMTown concerts for the 30th anniversary are scheduled throughout the year in Mexico, Los Angeles, London, and Japan.
The release of the fourth-quarter income coincided with the unveiling of a teaser for Hearts2hearts, a new girl group set to debut on February 24. While specific deadlines were not disclosed, SMTR 25 was mentioned.
“As we celebrate this milestone, we remain committed to our mission of advancing the global K-POP industry into its next chapter,” Jang affirmed.
SM Entertainment revenues rose 9% to $196m in Q4; K-Pop firm retires $27.8m worth of its own shares
