On Aug. 1, 2015, SK Holdings Co. merged with SK C&C to form the holding company SK Business Group. The holding company now has 13 trillion won in assets.
SK Holdings has made a good start, as the company not only serves as a “control tower” for the business group, but has also gained ground in exploring new businesses, as it has declared its intention to become a holding company-cum business executor in such areas as semiconductor materials and bio/pharmaceuticals.
SK Group’s buzzwords are “firing on all cylinders in investments.” In a recent extended management meeting, Chairman Chey said, “There is no future unless SK breaks the mold in an age of sudden death.” He made the remarks at a meeting of CEOs of the group’s subsidiaries at the SKMS Research Institute in Icheon, Gyeonggi-do, on June 30. Subsidiaries of SK Group are implementing projects amounting to a combined 10 trillion won in several parts of the nation. SK Hynix, SK E&S and SK Gas are pouring 6 trillion won, 2.5 trillion won and 1 trillion won in expanding plants, respectively. Chairman Chey’s belief is that the harder things become, the more investments need to be made.
SK Holdings’s consolidation with SK C&C started to bear fruit. SK Materials, a semiconductor material maker SK Group acquired after the merger, chalked up the best-ever business performances for the second quarter of this year 116.5 billion won in sales and 38.8 billion won in operating profit. SK Materials has expanded and diversified so far this year. The company plans to set up overseas operations and joint ventures to pursue M&As.
SK BioTech and SK BioPharm, elevated to daughter companies of SK Holdings, have gained ground. SK BioTech, a maker of raw materials for medicines, made a quantum jump by posting 50 billion won in sales and 15 billion won in operating profit for the first half of the year, a two-fold jump over the same period of last year.
SK BioPharm, a new drug maker, is targeting 100 billion won this year and 1.5 trillion won by 2020.
Chairman Chey: ‘SK Should Break the Mold’
With Brexit, Britain’s decision to leave the European Union fait accompli, an unprecedented gloomy business situation is on the horizon in the second half of this year, as growth forecasts of the Korean economy have been lowered, and Korea has seen its exports decline for the 18th consecutive month. Amid a flurry of uncertainties, Chairman Chey urged CEOs to establish steps to reinvent business, organization and corporate culture tailored to satisfy each subsidiary’s business environment and implement action plans until the next meeting of CEOs in the second half.
“The current business management situation dictates the fact that any company that does not change might be faced with sudden death, disappearing any time, not necessarily in a slow fashion,” Chey said.
He stressed that they should have a mindset of changing all things if they want to avoid the worst price.
Chairman Chey has emphasized the importance of “disruptive innovation” to rebuild a strong SK Group since his return to the group’s top management last year. Chey’s latest remarks are not a divergence from those made in the past, but his most recent comments are the strongest-yet. Chey added that subsidiaries might see lower return on equity (ROE) rates and price-earnings ratio (P/E Ratio) drop below 1.
The chairman stressed a sense of crisis during the meeting. Growth forecasts of the national economy have declined and external and internal economic circumstances are uncertain. Making things worse, Brexit has made all these risks more volatile.
In order to overcome the situation, he called for CEOs to work out detailed plans to innovate the way subsidiaries go about business, the way employees conduct their work and ways of upping the ante in asset management efficiency.
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SK Group headquarters in downtown Seoul. (Photos: SK Group)
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