Kumho Petrochem expedites reorganization with more focus on core businesses
South Korea’s major chemical firm Kumho Petrochemical Co. is expected to see its first-half operating profit jump fivefold on year as it dumps money-losing assets and rationalizes business portfolio.
According to investment banking industry sources on Wednesday, Kumho Petrochemical has recently sold off its 50 percent stake in Nanjing Kumho GPRO Chemical Co., a joint venture with China’s leading private chemical company Jiangsu GPRO Group, to the partner’s unit Jiangsu Zhongshan Chemical Co. Terms of the deal were not disclosed but the sales price is estimated to be tens of millions of dollars.
Kumho Petrochemical established the joint venture in 2008 and invested a total $113 million to build a plant that produces polypropylene glycol and caustic soda used for insulation materials.
The latest divesture is part of Kumho’s efforts to realign its business portfolio to rebuild profitability.
In March, the company unveiled a plan to achieve 9 trillion won ($7.9 billion) in revenue by 2025 by investing more than 400 billion won each year in core businesses such as acrylonitrile-butadiene latex (NB latex), epoxy and solution styrene butadiene rubber (SSBR) to shore up profitability. Recently, it has decided to acquire a 50 percent stake in Kumho Polychem from Japan’s JSR to wholly own the unit to bolster rubber production.
Kumho Petrochemical has turned aggressive in fostering the growth of the company, hiring a professional manager to run the company in May as Park Chan-koo stepped down from the helm of the company following the family feud over management control with his nephew Park Chul-wan.
According to consensus compiled by financial information provider FnGuide, Kumho Petrochemical’s operating profit is projected to soar five times on year to 1.27 trillion won in the first half of this year on sales of 3.8 trillion won. The company reported record quarterly earnings in the first quarter ended March, logging 612.5 billion won in operating income on sales of 1.85 trillion won.
Shares of Kumho Petrochemical finished Thursday up 0.47 percent at 213,000 won in Seoul.
By Kang Doo-soon, Park Chang-young, Choi Keun-do and Lee Soo-min
(Pulse by Maeil Business News Korea)