Korea Land and Housing Corp. (LH) posted over 1 trillion won in net profit last year, while the company’s debts were reduced for the first time since 2009 when the new company was born from the merger of the Korea Housing Corp and Korea Land Corp.
The company’s sales came to 21.241 trillion won last year with operating profit at 1.111 trillion won, up 16 percent and 34 percent respectively year-on-year, the company said recently. Net profit was up 19 percent year-on-year , at 847.9 billion won last year.
The state-run company’s assets totaled 171.6 trillion won as of the end of 2014; debts staying at 137.9 trillion won; capital at 33.7 trillion won; debts down by 4.3 trillion won from the preceding year with capital increasing by 2.6 trillion won.
However, total assets fell 1.7 trillion won from 2014.
LH officials said sales revenue rose enough to reduce the debt, while capital also increased to build a sound base for financial health. Debt increased by an annual average of 7.6 trillion won since 2003. The financial debts also fell 7.2 trillion won last year to stand at 98.5 trillion won from 105.7 trillion won at the end of 2013.
The officials said since the arrival of President Lee Jae-young in 2013, the company declared the freeze in its debts to normalize the company’s operation and took measures to maximize its income, for example, from the sales of its land while the payments were minimized or rationalized as much as they can.
Last year, LH sold 27.2 trillion won worth of land compared to 22 trillion won in 2013, up 23 percent year-on-year. In order to increase cash income, the company launched an all out sales system in which sales records were reflected in personnel performances and given incentives under the sales target management system, which played a big role in boosting the sales of the company’s land.
The company has been managing 700,000 home rentals for the sake of modest-income families, which can be a big source for the company’s poor operational results, but the company made 1 trillion won in profit from the housing rental business, a result of all the employees doing their best to boost the company’s income.
They will continue to work on normalization of the company’s operation and reductions in debt, as a government-run company should. President Lee Jae-young of the Korea Land and Housing Corp. (LH) is no longer a “hurry, hurry” man and is now considered a “step-by-step man” as he turns around his management style in the wake of the sinking of the ferry Sewol and its resulting loss of more than 300 lives.
The CEO, who has been on the job just over a year, said the former management style earned more money for the company, but they don’t want to see accidents happen in their line of work, including on construction sites for high-rise apartments.
“We have opted to be more cautious in our operations, although hard work is important,” the CEO said in explaining why he changed the style of the company’s operation from “work hard and fast” to a more cautious style with safety being the key word at all worksites around the country since the ferry accident on April 16.
The urgent tasks that Lee is now faced with are to reduce LH’s debts, which have snowballed to over 142 trillion won, and meet demand for public housing and other housing welfare programs to a level that is satisfactory to the general public, stressing workplace safety.
LH’s debt rises 100 million won for each housing unit the company builds, and government projections are for 50,000 residential units to be built around the country annually to meet the demand for new housing.
LH’s expenses are high prior to building residential units as it needs land, construction costs, and payment of indemnity.
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