Chaebol Chatter
Major Korean companies are overhauling their business strategies for this year in order to deal with currency appreciation, come up with market-leading products, and slim down their organizations.
The Samsung Group is downsizing itself across all of its subsidiaries regardless of Samsung Electronics’ sales and operating profits estimated to have reached at least 50 trillion won (US$44 billion) and 7 trillion won (US$6 billion) in the third quarter, respectively. This is based on a determination that the improved results were because of external factors such as foreign exchange rates rather than its own competitiveness. “In many cases, we are paid in dollars for semiconductor and display components, and the foreign exchange rate movement during the third quarter was advantageous for us,” Samsung Electronics explained.
In the meantime, the Hyundai Motor Group is still struggling with the weak yen and China shock. In the third quarter, the group’s operating profits fell 14.1 percent from a quarter ago to 1.5039 trillion won (US$1.3301 billion).
Those in the shipbuilding, steel, and petrochemical industries are failing to make a breakthrough either, with the sectors remaining in the doldrums, and Chinese companies supplying products at giveaway prices. POSCO recorded 652 billion won (US$576.6 million) in profits in the third quarter, but its non-operating losses amounted to 1.216 trillion won (US$1.075 billion) during the same period, due mainly to foreign exchange losses.
Hyundai Heavy Industries’ operating losses increased to 678.4 billion won (US$599.9 million) in the third quarter, contrary to expectations. This was mainly because large-scale offshore plant construction projects were put off until next year due to the global economic recession and plummeting oil prices.