Hyundai Heavy Industries (HHI) has decided to split the company into six separate entities to salvage itself amidst the sagging global economy.
The shipbuilding and marine plant businesses, which account for more than 80 percent of HHI’s total sales, will be retained as HHI. The five other businesses will focus on electric/electronic systems; construction equipment; green energy; robots/investment; and services. They will be spun off as separate entities.
The plan was approved at a meeting by HHI’s board of directors on Nov. 15.
The step may be construed as part of HHI’s measures to concentrate its resources and capabilities on the mainstay shipbuilding and marine plant businesses, as well as to ramp up the competitiveness of the non-shipbuilding businesses, which have been getting less self-sufficient within HHI.
The electric/electronic system, tentatively known as Hyundai Electronics and Energy System, will be the largest among the new companies. The business chalked up 2.686 trillion won in sales last year. It had 2,677 employees as of the end of September.
The construction equipment business, tentatively named as Hyundai Construction Machinery, will be the second-largest new entity. The business with 1,251 employees posted 1.844 trillion won in sales last year. It specializes in such construction equipment as excavators and forklifts.
“HHI has so far focused on disposing of non-essential businesses, and from now on, each unit will concentrate its capabilities to nurture core sectors,” an HHI official said.
The split plan is the biggest business portfolio reshuffle in 43 years after it was founded in 1973. The plan calls for the shipbuilding and marine plant businesses to be retained within HHI on top of the engine business, and split other non-shipbuilding businesses into separate entities.
In reality, HHI began to materialize the split plan last year. In July 2015, the robot and automation businesses were spun from the engine machinery division, and the pump/compressor business was split from the division to create Hyundai HHI Turbo Machinery.
A focus in the splint plan is about the changing of the majority stakeholder of Hyundai Oilbank from HHI to Hyundai Lobotics, to be spun off from HHI. HHI now owns a 91.1 percent stake in Huyundai Oilbank. The refinery company is the cream of crop among Hyundai Group subsidiaries as it ranked in 2.664 trillion won in sales and 94.5 billion won in operating profit in the third quarter of this year.
“The step may be construed as HHI Business Group’s efforts to give more leverage to the robotics business,” a business source said. HHI is considering ways of securing enough cash by disposing of its stakes in such companies as Hyundai Construction Machinery, he said.
The split plan is to be approved by a shareholders’ meeting, to be convened next Feb. 27. Approval of the plan requires participation by holders of one-third of the issued shares and yes votes from two-thirds of the participating shareholders. The split is to take effect next April 1.
HHI Wins Order to Build Two 2,600 ton Frigates for Philippine Navy
Hyundai Heavy Industries (HHI), the world’s largest shipbuilder, announced on Oct. 24 that it signed a contract to build two 2,600 ton frigates with the Department of National Defense, the Republic of the Philippines.
The signing ceremony held in Manila, Philippines, was attended by Chung Ki-sun, executive vice president of Corporate Planning Office of HHI, Delfin Lorenzana, Philippines’ Defense Secretary and Kim Jai- shin, Korean Ambassador to Philippines and other guests.
The frigates will be designed to be a smaller light combatant and successor to the Incheon class frigate which is now in active service for ROKN tailored to the requirement of the Philippine Navy with applying optimized range of good marine standard under naval rule from Lloyd Register, classification society.
The 107 meter frigates to be propelled with CODAD (Combined Diesel and Diesel) propulsion system with maximum speed of 25knots can cover a 4,500 nautical miles range at cruising speed of 15 knots. The naval vessels will inherit the enhanced survivability, seakeeping and maneuvering capability of her mother ship operable up to Sea State 5.
The frigates heavily armed with missiles, torpedo, guns and sensors controlled by the latest combat management system are capable of conducting Anti-Air Warfare, Anti-Surface Warfare, Anti-Submarine Warfare and Electronic Warfare. The frigates are scheduled to be handed starting from 2020.
Since the delivery of the first Korean-built frigate ROKS Ulsan in 1980, HHI has played a pivotal role in the modernization of ROK Navy designing major warships. And evidently it now expands its service to worldwide navies with advanced, affordable warships.
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