Lee Hyo-sik is Finance Desk editor at The Korea Times. He manages finance-related stories on macroeconomics, banks, stocks, bonds, crypto etc. He is passionate about covering what's happening in Korea's financial industry and explaining it to both Korean and non-Korean readers. You can reach him at leehs@koreatimes.co.kr. Your insights and feedbacks are always appreciated.
LH set for another leap forward with relocation
The headquarters of Korea Land and Housing Corp. (LH) in Jinju, South Gyeongsang Province. The state-run real estate developer moved its headquarters from Seongnam, Gyeonggi Province, in May. / Courtesy of LH
By Lee Hyo-sik
By Lee Hyo-sik
The Korea Land and Housing Corp. (LH), the state-run real estate developer, has been working hard to reduce its debt and overhaul its business portfolio under the leadership of CEO Lee Jai-yeong.
Lee, who took the helm in June 2013, has been spearheading a full-scale restructuring campaign to turn one of the nation’s largest public enterprises into a more agile, financially-sound and efficiently-managed entity.
LH has slashed operational expenses and downscaled employee benefits through belt-tightening measures, while disposing of non-essential assets and focusing more on profitable development projects.
As a result, the company has lowered its debt by more than 10 trillion won ($9.1 billion) over one-and-a-half years, saving about 400 billion won in interest costs. In line with LH’s improving balance sheet, credit rating agencies at home and abroad have raised its credit worthiness, which has enabled it borrow money at lower costs.
The recent relocation of the company headquarters to Jinju, South Gyeongsang Province, has provided a further boost, according to its spokesman, who said LH is posed to make another leap forward in the coming years.
“I can say LH stands out among many public companies, which have been trying to reduce debt and overhaul management over the past few years,” a LH spokesman said. “In 2014, we reduced our outstanding liabilities by 7.2 trillion won and in the first five months of the year, we paid back 3 trillion won. We have been very successfully in enhancing our financial soundness.”
As of May, LH’s outstanding debt totaled 95.4 trillion won, down from 105.6 trillion won in December 2013.
The firm’s improving balance sheet has prompted Moody’s, Standard & Poor’s (S&P) and other credit ratings agencies to increase its corporate ratings. In April, Moody’s raised LH’s credit outlook from “stable” to “positive.” Moody’s, S&P and Fitch all rate LH on a par with Korea’s overall sovereign ratings.
“Besides its improved financial standing, it has been able to implement a wide range of development projects in a more cost-effective manner under CEO Lee’s leadership,” the spokesman said. “LH has been partnering with more builders and other private entities to more effectively carry out development schemes. Thanks to the rebounding real estate market, we have been able to sell public land to private-sector developers at higher prices.”
Upon moving its headquarters to Jinju last month, LH has unveiled a vision on how it will become Korea’s most market-oriented and efficiently-managed public enterprise in the coming years.
“The company streamlined its organizational structure, prior to its relocation to Jinju, to better cope with changing business environment,” the spokesman said. “We will continue to foster innovation and work hard to better serve the public.”