Chairman Christopher Koo of LS Group.

LS Group is under stewardship of Chairman Christopher Koo, now five years in office. The group is entering the final stretch in its drive to restructure businesses and improve financial soundness. The business group keeps its mainstay businesses, including electrical wire, machineries and energy sectors, going in a matured shape, which depend on overseas sales too much, causing setbacks in growth and profit-taking for several years.

LS Group’s two big M&As acquisition of Kukje International, the predecessor of LS Networks, and Superior Essex (SPSX) have weighed down on its finances. 

Chairman Koo has launched a massive restructuring to overcome a crisis, which is scheduled to be wrapped up by this year. Under the plan, major subsidiaries of the group are entering the final stretch to complement the financial restructuring. Noteworthy is a plan to dispose of LS Automotive, which will allow the business group to secure a cash of 1 trillion won.

The group once considered a possibility of putting LS Automotive on the block but changed its mind about an initial public offering (IPO). Of late, it reversed course, a source familiar to the matter said. LS Mtron owns a 100 percent stake in LS Automotive, an automotive electronics components maker. LS Automotive, a charming profit-taking company, chalked up 910 billion won in sales and 62.8 billion won in operating profit last year. An electronic filing released by LS Group said the group was studying several options, including the dispoal of a stake in LS Automotive. The group plans to use part of the proceeds from to explore future growth engines. 

The group’s electric wire business is now in good shape after undergoing a long-standing restructuring process. LS Cable & System (LSCS) listed LSCS Asia, a subsidiary with plants in Vietnam, on the Korean bourse last year and secured 54 billion won in proceeds stemming from the sale of shares and used parts of the proceeds to repay borrowings to lower LSCS’s debt ratio from 406 percent in 2014 to 275 percent last year.

SPSX LSCS was acquired for a huge 1 trillion won in 2008 and has undergone massive restructuring. The company posted $39.5 million in operating profit, the first profit since the restructuring. LS I&D was established in a spin-off of LSCS’s real estate business and SPSX and other overseas businesses to ease LSCS’s financial burden of debts. LS I&D saw its debt ratio plunge from 1,481 percent in 2014 to 597 percent last year by disposing of the group’s real estate holdings, including real estate in Gunpo and Anyang. LS I&D has managed to turn around by posting 39.5 billion won in operating profit for the first time thanks to a rebounding business performance of SPSX since it suffered 13.3 billion won and 45.2 billion won in losses in 2014 and 2015, respectively. 

The group’s restructuring of businesses and improving of financial conditions, being carried out under the stewardship of Chairman Koo, are to be wrapped up this year, and major subsidiaries of the group are forecast to log stabilized sales and operating profits for the time being based on solid fundamentals, business sources said. 

LS Networks, an LPG importer and seller and a subsidiary of E1, headed by Chairman Koo Ja-yong, is undergoing a process of restructuring and improving financial conditions. E1 saw its debt surge by 750 billion won by acquiring LS Networks for 855.1 billion won in 2006. 

LS Networks suffered 72.8 billion won and 58.2 billion won in losses in 2015 and 2016, respectively, due to sagging performances of the fashion and outdoor businesses. The company underwent restructuring by disposing of Skechers Korea to the U.S. headquarters of the brand and spun Montbell off as a subsidiary. 

LS Networks has the sole Korean brand Prospecs. The company disposed of a building in Daechi-dong, Seoul, for 42 billion won and a storage site in Gimhae for 77 billion won last year. The company also plans to dispose of a frozen storage site in Seongnam, Gyeinggi-do, this year.

LS Tower, LS Group headquarters in Anyang, south of Seoul. (Photos: LS)