Hyundai con­firms spin-off plans

The Myanmar Times - - International Business -

SOUTH Korea’s Hyundai Heavy In­dus­tries will split its non-ship­build­ing busi­nesses into sep­a­rate com­pa­nies to im­prove man­age­ment ef­fi­ciency as the coun­try’s ship­yards un­dergo mas­sive re­struc­tur­ing.

South Korean ship­builders in­clud­ing Hyundai Heavy In­dus­tries and Dae­woo Ship­build­ing and Marine have strug­gled with mount­ing losses as global de­mand slows and com­pe­ti­tion from Chi­nese ri­vals in­ten­si­fies.

The gov­ern­ment and cred­i­tor banks – in­clud­ing the state-run Korea De­vel­op­ment Bank – in re­cent months have urged in­tense re­struc­tur­ing ef­forts in­clud­ing mass job cuts.

Un­der the plan, Hyundai will op­er­ate six sep­a­rate com­pa­nies to spin off the non-core equip­ment and con­struc­tion sec­tors from its core busi­nesses, in­clud­ing ship­build­ing, off­shore and in­dus­trial plants, the com­pany said in a state­ment.

Its non-core di­vi­sions range from con­struc­tion equip­ment to green en­ergy to ro­bot­ics and ac­count for 13 per­cent of sales.

The ship­builder said the spin-off was part of its re­struc­tur­ing plan sub­mit­ted to cred­i­tors.

“There was in­ef­fi­ciency be­cause our man­age­ment was cen­tred on ship­build­ing and it was dif­fi­cult for busi­nesses that record smaller sales to se­cure in­di­vid­ual com­pet­i­tive­ness,” it said in a state­ment.

The na­tion’s so-called “Big Three” ship­builders in­clud­ing Hyundai, Dae­woo and Sam­sung Heavy In­dus­tries racked up col­lec­tive losses of 8.5 tril­lion won (US$7.2 bil­lion) last year.

They were hailed as a ma­jor driver of the coun­try’s ex­port-re­liant econ­omy – Asia’s fourth-largest – be­fore be­ing forced last year to shed thou­sands of jobs and as­sets to stay afloat.

Mean­while shares of ship­ping firm Korea Line plunged as in­vestors ques­tioned the car­rier’s abil­ity to fund its ac­qui­si­tion of the as­sets of bank­rupt gi­ant Han­jin.

The Seoul Cen­tral Dis­trict Court on Novem­ber 14 chose Korea Line as the pre­ferred bid­der over Hyundai Mer­chant Marine for Han­jin’s USAsia route, not­ing it had of­fered bet­ter terms for the bid.

Han­jin – South Korea’s largest ship­ping com­pany – filed for bank­ruptcy pro­tec­tion in Au­gust af­ter the mar­ket suf­fered its worst down­turn in six decades.

In ad­di­tion to Han­jin’s US-Asia route, Korea Line made a bid for Han­jin’s 54pc stake in a port ter­mi­nal in Long Beach, Cal­i­for­nia, and of­fered job se­cu­rity for some 700 Han­jin em­ploy­ees. –

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