Korea Land and Housing Corp. (LH) posted results last year with its sales revenue and net profit being the largest since its merger in 2012, the company said on April 4.
LH officials said its net profit also climbed to the highest level since 2012. They said the sales revenue amounted to 23.7 trillion won, up 12 percent year-on-year, operating profit 1.47 trillion won, up 32 percent year-on-year and net profit 980.1 billion won, up 16 percent year-on-year. Both sales revenue and operating profit posted the largest in the company’s history, they said.
The company paid off 8.6 trillion won in debts to cut its total debts to 89.9 trillion won last year, bringing the debt level below 90 trillion won for the first time in many years.
The company said it was able to post net profit by letting private investors participate in the rental housing construction and REIT projects, while boosting profit from the sales of its assets.
LH manages potential financial risks effectively by taking preemptive action to deal with them in order to push its debt reduction program. “We have upgraded the conventional FRM (financial risk management) by reflecting cash flow, financing, policy changes, and asset-debt imbalance, making it possible to address liquidity crises and efficient asset and liabilities management,” the company said. “In particular, we installed a financial risk management system with a reporting system for risk monitoring and risk situation analysis on a regular basis, improving our capacity to address financial risks through firm-wide risk management.”
LH launched diverse business methods using private capital and undertook downsizing in response to market demand, reducing cost and establishing a low-cost business structure with optimized investment and investment withdrawal. “We are making an effort to cut costs while actively engaging in diverse projects including governmental policy projects by utilizing private creativity and funds and diversifying business methods for shared growth with the private sector,” the company said. “In particular, we are pushing the rental housing REITs program designed to construct rental housing on the empty public housing sites owned by LH for the stable supply of rental housing by utilizing the national housing funds and private capital.”
LH is reshuffling its business to meet market demand by reconsidering its projects to scale down or adjust project periods, on the one hand, and carrying out new projects with a focus on governmental policy projects with its financial conditions under consideration, on the other.
LH aims to cut costs in each process of its land housing projects. It adopted various business feasibility verification systems for cost management in each project stage and saw 1.12 trillion won in debt in 2014 by taking the bold step of cutting costs in each stage of land projects, from licensing to compensation to construction. “Also, we could save 206.3 billion won through the housing construction cost management that faithfully reflected basic performance and economic feasibility. “In addition, we could slash 23.4 billion won in labor cost, welfare expenses, and operating cost through the management efficiency drive joined by all employees including the CEO,” they added.
LH has seen debt increase for various reasons, including the slow real estate market and consequent aggravation in profitability, structural characteristics of the business that requires large-scale initial intensive investment and long-term investment withdrawal, and the undertaking of governmental policy projects. In an effort to ride out its business crises resulting from a paradigm shift in land and housing policy, constraints of the conventional business methods, and the aggravated financial structure, LH does its best to stabilize its business. The company has undertaken business restructuring right after the integration and took aggressive steps to attract governmental support.
Taking the Lead in Government’s Debt Reduction Program: LH is carrying out the financial management plan it formulated in June 2013, which a focus on improving financial stability and profitability for the efficient distribution of limited financial resources and enhancement of financial soundness and building a virtuous cycle of business structure.
_LH부채감소.jpg)
_LH 박상우.jpg)
