|SK Holdings CEO Jang Dong-hyun speaks during the company's annual general meeting at its headquarters in Jongno-gu, Seoul, Wednesday. Yonhap|
Hanwha, LS holding firms focus on financial stability
By Nam Hyun-woo
SK Holdings decided keep its dividend ratio unchanged despite its net profit declining significantly.
During the company's annual general meeting, Wednesday, stakeholders approved Jang's reappointment as an inside director of the board. In addition to Jang's reappointment, the shareholders approved agendas proposed by the board, including the dividend ratio.
SK Holdings' annual general meeting garnered attention as it took place amid the company's sluggish share price. Despite market expectation on the initial public offering of the company's pharmaceutical unit, SK Biopharmaceuticals, the investment-holding firm saw its share price declining, failing to buck the market downturn amid the COVID-19 outbreak.
The company's weakened earnings also triggered concerns. Its consolidated net profit last year stood at 1.6 trillion won ($1.3 billion), down 73 percent from a year earlier.
To soothe investors' concerns, Jang sent a letter to shareholders before the meeting and said the company would "continue to increase shareholder returns with the IPO of SK Biopharmaceuticals" and spare no efforts to "develop the optimal portfolio structure."
Last year, SK Biopharmaceuticals licensed out its anti-epileptic drug XCOPRI to the European market and won an approval from the U.S. Food and Drug Administration.
Buoyed by the achievements, SK Holdings seeks to debut the pharmaceutical unit on the bourse in the first half of this year, but the current market downturn is causing difficulties for the company to set desirable offering prices.
Despite the concerns, the company proposed to maintain its common share dividend at 4,000 won for year-end and 1,000 won for mid-term, in order to buoy shareholder value. During the meeting, the company included shareholder value as one of the core objectives in its articles of association.
Hanwha Group's holding firm, Hanwha Corp., also held its annual general meeting on Wednesday and approved three new directors in its board. Of them, Senior Managing Director for finance Seo Kwang-myung was appointed as new inside director and joined three existing inside directors including Hanwha Group Vice Chairman and Hanwha Corp. CEO Keum Choon-soo.
Seo is a finance specialist leading Hanwha Corp.'s corporate bond issuance and fund raising. Citing this, the company said it will pay greater attention to improving its financial structure.
The company posted 1.13 trillion won in consolidated operating profit last year, down 37.7 percent from a year earlier. The group's solar and defense units posted solid earnings last year, but the slowdown in the groups' financial units hampered the consolidated operating profit of the holding firm, raising the necessity for improving its financial structure.
"Seo has a rich experience in leading the company's financial matters and is expected to serve his role well for the board," a Hanwha Corp. official said.
A day earlier, the group's key chemical and solar power firm, Hanwha Solution, named Kim Dong-kwan as a member of its board. Kim is the eldest son of Hanwha Chairman Kim Seung-youn.
The appointment is expected to provide Kim a stronger grip on the group's chemical and solar energy businesses, which the group has identified as its next growth engines.
LS Group's holding firm, LS Corp., also held its annual general meeting and reappointed group Chairman Koo Ja-yeol and LS CEO Lee Kwang-woo as inside directors of the board.
During the meeting, Lee said the company has "focused on establishing fundamental business capability last year and will see actual improvements this year."
For this, Lee said it will localize workforces at its global offices, secure enough liquidity for contingency and digitalize its management system.
Of those goals, securing liquidity is one of the main tasks for the company. Last year, LS Corp. logged 352 billion won in consolidated profit, down 31.7 percent from a year earlier. During the same period, the company's debt ratio also inched up to 152 percent from 140.1 percent.
Though a ratio below 200 percent is usually regarded as a stable level, Lee said the company will "improve its cash flow to secure more liquidity and enhance its readiness."
A day earlier, LS Group's key affiliate, LS Industrial Systems changed its corporate name to LS Electric, to clarify its business objective of expanding its electrical equipment business globally.