Hyundai Heavy Industries announces 3.5 trillion won management improvement plan
Hyundai Heavy Industries (HHI), the world’s largest shipbuilder, announced today that it will implement a management improvement plan by 2018. This plan, worth 3.5 trillion won, is purposed to rebuild trust in the market, improve its balance sheet, and sharpen HHI’s competitiveness, the company said in its press release.
According to the plan, HHI will secure 1.5 trillion won with the sell-off of its shares of Hyundai Motor and KCC, its stakes in Hyundai Avancis, and certain properties and receivables. It will also secure 900 billion won with an employee salary cut and work-sharing. It will also secure 1.1 trillion won with the spin-off and sell-off of a part of its business, and the reorganization of affiliated companies. HHI is also considering a contingency plan that it will secure an additional 3.6 trillion won in case of need.
Once the plan is in place, HHI expects that its liabilities-to-equity ratio will drop from the current 134% to 80% by 2018. The total debt will also be cut down by about 2 trillion won to 6.6 trillion won.
Since the inauguration of the current management in September 2014, HHI has practiced pre-emptive and intensive reform measures worth 3.9 trillion won. These measures include sale of corporate shares and treasury stocks, issuance of perpetual bonds, re-engineering of HHI’s portfolio to center more on its core businesses, and a restructure of its business organization by spinning off its industrial machinery business.
On the back of these efforts, in the first quarter of 2016, HHI swung to a profit of 325.2 billion won, putting an end to a nine-quarter losing streak. One HHI official said, “We will duly implement the plan. In doing so, we will lay the solid foundation for taking off and rebuilding trust of our clients.”
