Absence of chairman felt little amid stable growth
By Park Si-soo
When SK Group Chairman Chey Tae-won was put behind bars in January of last year for embezzlement, a vernacular economic daily described it as a "national crisis," citing his company's marked contribution to the Korean economy.
A lot of analysts and market watchers cast a worried look at the country's third-biggest conglomerate, predicting the leadership vacuum would hurt the competitiveness of its three driving forces ㅡ telecommunications, energy and semiconductors.
One-and-a-half years into the "crisis," however, the chairman's absence is little felt in the company. The main units of the group have performed strongly without their leader.
With the chairman's four-year prison term ending in early 2017, the group's top decision-making body, the SUPEX Council chaired by Kim Chang-geun, is controlling the group, with Chey intervening sporadically through handwritten memos.
The group's second-biggest cash cow SK Telecom (SKT) has kept its market share in the domestic mobile career business well above 50 percent despite lavish spending for marketing and state sanctions that also hurt the bottom line of its two rivals, KT and LG Uplus, in the first quarter of the year. SKT plans to announce its second quarter earnings on Aug. 1.
SK hynix, the world's second-biggest memory chip maker, seems to be the least affected by the chairman's absence. The company's operating profit in the first half of the year reached 2.14 trillion won, an all-time high for six months.
In the second quarter alone, the chipmaker reported 1.08 trillion won in operating profit, up 2.5 percent from a quarter earlier. It sales rose 4.8 percent year-on-year.
SK hynix's strong performance is offsetting relatively weak earnings of other units. Chey made the bold decision to take over the chipmaker in 2011 with the investment of 3.3 trillion won.
However, most other units of the group are not performing well. Even the flagship SK Telecom's annual sales have stalled at about 16 trillion won since 2010.
The group is not carrying out new investments as its boss is in jail.
"We need some cause with which we can plead with the government and lawmakers to have the chairman released earlier than scheduled. But it's not easy," an SK official said.
An SK Group executive said that the group cannot make a large-scale investment decision without Chey at the helm.
"A large-scale investment needs a lot of consideration and study. With our chairman behind the bars, it's practically impossible to draw up such a plan and carry it through," the executive said, declining to be named.
SK Innovation, the group's biggest cash-maker, has been maintaining a comfortable lead in the domestic oil market for decades. Although the company's earnings in the second quarter were weaker than expected, nobody blames it on the chairman's absence.
"It can be blamed on declining demand for petrochemical products in China and Southeast Asia," an SK Innovation official said, citing the firm's two biggest overseas markets. "This is a problem every player in the industry experiences."
Three other oil refiners here ㅡ GS Caltex, S-Oil and Hyundai Oilbank ㅡ face equally tough times, reporting drops in revenue and operating profit in the April-June period.
Unlike many other convicted tycoons who pretended to be ill to be released on parole, Chey is said to be "healthy," eating three meals a day without trouble and "getting along with other inmates," according to other officers.
SK officials say that the group needs its chairman back on the job to steer it out of its current management difficulties, saying the long leadership vacuum will pose a greater burden on the whole group.
By many accounts, it's unlikely that the jailed chairman will benefit from a special pardon, if any, because President Park Geun-hye's approval rating is low.
Political experts say a presidential amnesty is possible only when the President enjoys high popularity because doing it always bring about a political backlash, adding it's unlikely that Park's popularity will rebound sharply anytime soon because of a series of scandals that tarnished her image.
Another stumbling block against Chey's early release, they pointed out, is Park's firm will to restore "fairness" of society.
By Park Si-soo
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| Chey Tae-won SK Group chairman |
A lot of analysts and market watchers cast a worried look at the country's third-biggest conglomerate, predicting the leadership vacuum would hurt the competitiveness of its three driving forces ㅡ telecommunications, energy and semiconductors.
One-and-a-half years into the "crisis," however, the chairman's absence is little felt in the company. The main units of the group have performed strongly without their leader.
With the chairman's four-year prison term ending in early 2017, the group's top decision-making body, the SUPEX Council chaired by Kim Chang-geun, is controlling the group, with Chey intervening sporadically through handwritten memos.
The group's second-biggest cash cow SK Telecom (SKT) has kept its market share in the domestic mobile career business well above 50 percent despite lavish spending for marketing and state sanctions that also hurt the bottom line of its two rivals, KT and LG Uplus, in the first quarter of the year. SKT plans to announce its second quarter earnings on Aug. 1.
SK hynix, the world's second-biggest memory chip maker, seems to be the least affected by the chairman's absence. The company's operating profit in the first half of the year reached 2.14 trillion won, an all-time high for six months.
In the second quarter alone, the chipmaker reported 1.08 trillion won in operating profit, up 2.5 percent from a quarter earlier. It sales rose 4.8 percent year-on-year.
SK hynix's strong performance is offsetting relatively weak earnings of other units. Chey made the bold decision to take over the chipmaker in 2011 with the investment of 3.3 trillion won.
However, most other units of the group are not performing well. Even the flagship SK Telecom's annual sales have stalled at about 16 trillion won since 2010.
The group is not carrying out new investments as its boss is in jail.
"We need some cause with which we can plead with the government and lawmakers to have the chairman released earlier than scheduled. But it's not easy," an SK official said.
An SK Group executive said that the group cannot make a large-scale investment decision without Chey at the helm.
"A large-scale investment needs a lot of consideration and study. With our chairman behind the bars, it's practically impossible to draw up such a plan and carry it through," the executive said, declining to be named.
SK Innovation, the group's biggest cash-maker, has been maintaining a comfortable lead in the domestic oil market for decades. Although the company's earnings in the second quarter were weaker than expected, nobody blames it on the chairman's absence.
"It can be blamed on declining demand for petrochemical products in China and Southeast Asia," an SK Innovation official said, citing the firm's two biggest overseas markets. "This is a problem every player in the industry experiences."
Three other oil refiners here ㅡ GS Caltex, S-Oil and Hyundai Oilbank ㅡ face equally tough times, reporting drops in revenue and operating profit in the April-June period.
Unlike many other convicted tycoons who pretended to be ill to be released on parole, Chey is said to be "healthy," eating three meals a day without trouble and "getting along with other inmates," according to other officers.
SK officials say that the group needs its chairman back on the job to steer it out of its current management difficulties, saying the long leadership vacuum will pose a greater burden on the whole group.
By many accounts, it's unlikely that the jailed chairman will benefit from a special pardon, if any, because President Park Geun-hye's approval rating is low.
Political experts say a presidential amnesty is possible only when the President enjoys high popularity because doing it always bring about a political backlash, adding it's unlikely that Park's popularity will rebound sharply anytime soon because of a series of scandals that tarnished her image.
Another stumbling block against Chey's early release, they pointed out, is Park's firm will to restore "fairness" of society.
