General Trading Companies
General trading companies in Korea are strengthening themselves by means of asset disposal and restructuring. The purpose is to boost their business efficiency amid the current economic recession by way of business streamlining rather than expansion.
According to industry sources, Samsung C&T retrieved its investment in the Ambatovy nickel mine in Madagascar in August by disposing of its 3% shares. It had set out to develop mineral resources for business diversification, but sold its shares to the Korea Resources Corporation (KRC) after failing to ensure profitability. The company had reacquired the shares in 2010 from the KRC at a price of 99.6 billion won (US$93.1 million).
“The disposal of the shares is for better risk management amid the fast-changing business environments,” said Samsung C&T, adding, “We will continue trying to sharpen our competitive edge by focusing on promising businesses.”
In the meantime, Hyundai Corporation sold its 66.25% out of 96.36% shares in Qingdao Hyundai Shipbuilding to a Chinese consortium on the condition that the consortium bears the burden of Qingdao Hyundai Shipbuilding. The disposal of the shares is expected to decrease the annual pre-tax losses of Hyundai Corporation associated with Qingdao Hyundai Shipbuilding from 20 billion won (US$18.7 million) to 7 billion won (US$6.5 million). Earlier in the past, the company had sold 0.5% of the nickel mine shares at a cost of 30.1 billion won (US$28.1 million).
SK Networks, which had handed over its school uniform business to small firms last year in the interest of joint prosperity and business efficiency, is now trying to sell its metal processing plant in Turkey, as the economic recession in Europe is ongoing to drag down its profitability. The process is expected to be wrapped up within this year.
At the same time, SK Networks is planning to increase the number of unmanned gas stations to the very same end while speeding up the overseas expansion of its competitive garment brands such as O’2nd. The brand is found in over 10 countries around the world now.
Daewoo International is disposing of its non-key assets as well, anticipating that the endeavor will be reflected in its business showings from next year. In 2012, it sold the shares in Kyobo Life Insurance worth 1.2 trillion won (US$1.1 billion) in total, along with its cement manufacturing subsidiary in Shandong. In addition, it has selected Taekwang Industry as the preferred bidder for the sale of its textile manufacturing factory in Busan City. Insiders estimate the factory at approximately 160 billion won (US$149.4 million).