SEOUL, March 15 (Korea Bizwire) – Hyundai Heavy Industries Co., a major shipyard here, said Wednesday that its shipbuilding-related sales will rise 30 percent by 2021 after its key business units are spun off, with each separated unit also expected to post robust growth.
In a session to explain its corporate spin-off scheme, Hyundai Heavy said its shipbuilding unit’s revenue would rise to 20 trillion won(US$17.5 billion) in 2021 and operating income of 2 trillion won, compared with last year’s 14.9 trillion won in sales and 105 billion won in operating income.
Late last month, shareholders of Hyundai Heavy approved the company’s plan to hive off its non-core businesses, aimed at what it claims is boosting each business unit’s competitiveness.
Under the plan, the shipyard will be split into four independent entities: shipbuilding, electronics, construction equipment and robotics, with the four to be formally launched in April. The trade of Hyundai Heavy shares will be suspended from March 30 through May 9.
The shakeup comes as part of a broader effort by the troubled shipyard to salvage itself from high indebtedness. The spinoff is expected to reduce the shipyard’s debt ratio to 95 percent from 106 percent at the end of last year.
“Each business entity will take a leap to become a leading player in each segment,” said Kwon Oh-gap, vice chairman of Hyundai Heavy, adding that the spin-off will help improve its financial status.
Hyundai Heavy swung to the black last year from a year earlier, thanks in part to reduced costs and improvement in its non-shipbuilding business.
Net income came to 682 billion won last year on a consolidation basis, a turnaround from a loss of 1.36 trillion won a year earlier.
Sales dropped 15 percent on-year to reach 39.32 trillion won, while it logged an operating profit of 1.64 trillion won, a rebound from an operating loss of 1.54 trillion won tallied in the same period the year before, it said earlier.