Hanwha Group Chairman Kim Seung-youn. (Photo: Hanwha Group)

Three years have passed since Samsung General Chemical and Samsung Total, acquired by Hanwha Group, changed their name to Hanwha General Chemical and Hanwha Total, respectively. Following the deal with Samsung Group, Hanwha Group has fulfilled two goals strengthening competitiveness in the chemical business division and expanding its business portfolio.
In November 2014, Hanwha Group struck a big M&A deal to take over Samsung General Chemical and Samsung Total, the chemical business units of Samsung Group, as well as Samsung Techwin and Samsung Thales, the defense industry units of the group. The deal was priced at about 2 trillion won, the private sector’s largest-ever voluntary restructuring. On April 30, the following year, the two former companies of Samsung Group changed their name and they were listed into Hanwha Group.
At the time of the deal, some people were worried about Hanwha Group’s “irrational” expansion. It was nothing like they had expected. Hanwha Total saw operating profit jump from 172.7 billion won in 2014 to 1.516 trillion won last year. Hanwha General Chemical turned around by logging 621.1 billion won in operating profit, a departure from a 4.2 trillion won loss in 2014.
Riding on the two former Samsung units’ good business performances, Hanwha Group’s chemical division saw sales surge from 11.761 trillion won in 2014 to 22.964 trillion won in 2017. The portion of the chemical division’s sales out of the group’s total surged from 26.4 percent before the deal to 35.7 percent. The division has been evaluated to emerge as a mainstay business sector of the group and has laid a foundation to rise to a world-class petrochemical company.
The chemical business division is evaluated to enjoy the advantages of economy of scale as Hanwha General Chemical and Hanwha Total have joined the conventional subsidiaries of the group Hanwha Chemical, Hanwha Advanced Materials and YNCC.
The group has established a vertical integration ranging from petroleum products from crude oil refinery facilities (Hanwha Total) to petrochemical basic materials though naphtha and aromatic processes (Hanwha Total and YNCC), synthetic resin and synthetic resin raw materials (Hanwha Chemical, Hanwha General Chemcal and Hanwha Total) and such advanced substance products, including automobiles, electronics and photovoltaic power (Hanwha Advanced materials). Hanwha Total and YNCC each produce 1.09 million tons and 1.95 million tons of ethylene, dubbed as “the essence” of the industry.
Hanwha is the sole group to produce more than 3 million tons of ethylene.
Hanwha Group’s good business performances in the chemical business division is owed to long-standing trust Hanwha Group has built with Samsung Group. Chairman Kim Seung-youn’s acquired Hanyang Chemical, now Hanwha Chemical, in 1982 and he has nurtured chemical as mainstay businesses of the group along with the defense business.
The M&A move came one year after he was inaugurated as chairman of the group. Despite some experts’ worry following the global recession and the 2nd global oil shock, Chairman Kim had pushed the deal. In his New Year’s message in 2015 shortly after signing the deal with Samsung, Chairman Kim described chemical and defense industry businesses as the ones Hanwha Group founder and his father and Chairman Kim had been pushing ardently and he called for his executives and staff members to devote themselves to making them as global leaders.
Officials of the group’s chemical subsidiaries say it provides full support to the chemical business division and the companies have synergetic effects.
They have been sharing information in five areas environment safety, manufacturing technology, business duties, logistics and quality since 2015. They have reduced the time to fix problems by sharing information, and the group wants to make the chemical business the group’s growth engine, a group official said.