Friday, November 22, 2019
Hanwha Group Restructures Aviation and Defense Businesses
A Father-to-son Control Transfer Imminent?
Hanwha Group Restructures Aviation and Defense Businesses
  • By Michael Herh
  • October 23, 2018, 12:17
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Hanwha Group has announced a sweeping restructuring plan, which analysts take as an indication that a father-to-son transfer of the group's managerial control is imminent.

A father-so-son transfer of managerial control appears to be imminent at the Hanwha Group.

The group announced a restructuring plan on Oct. 22, which analysts believe is intended to speed up the transfer of the group's management rights from chairman Kim Seung-yeon to his sons.

Under the plan, Hanwha Corp., which is the group's holding company, has decided to transfer its aviation business to Hanhwa Aerospace and the machine tool business to Hanwha Precision Machinery, which is a subsidiary of Hanwha Aerospace.

Industry watchers speculate that the group may be pushing to make Hanwha Corp. a "pure" holding company that does not engage in any business operations and exists solely for the purpose of owning stocks in its affiliates.

They also believe the group is seeking to make Hanwha Aerospace a global powerhouse in the industrial machinery sector. 

In addition, Hanwha Land Systems, a defense industry subsidiary of Hanwha Aerospace, has decided to absorb Hanwha Defense, which currently is its subsidiary.

Hanwha Corp.'s aviation business unit specializes in aircraft motor, hydraulic and fuel devices and landing gear, which is a component of the Korean-type next-generation fighter KFX. Hanwha Aerospace is a company focused on aviation engines. The company's takeover of the aviation business unit is expected to create synergies between the aviation engine and fuselage sectors.

Hanwha Corp.'s machine tool business unit mainly produces automatic CNC lathes for electric, electronic and auto parts. Hanwha Precision machinery's takeover of this unit will allow the company to sharpen its precision technology capabilities. In particular, the company will maximize synergies with chip mounters and collaborative robots and improve profitability.

Hanwha Land Systems will accelerate its penetration into overseas markets by actively participating in large-scale global projects. The company is producing K-9 self-propelled guns while Hanwha Defense produces maneuvering and anti-aircraft weapons such as the K-21 Armored Vehicle and K30 Biho, a short-range self-propelled anti-aircraft gun.

Hanwha explained that the merger of the two companies is a move to increase competitiveness in large-scale global projects as they share the same nature as ground defense platforms.