Kwak Yeon-soo is a digital editor at The Korea Times creating, editing and curating digital content for the newspaper’s website, mobile app and social media. She previously covered a diverse array of cultural, political and business topics.
Trading firms eye new businesses
Graphics by Bae So-young
By Kwak Yeon-soo
By Kwak Yeon-soo
Three major trading firms ― POSCO International, LG International and SK Networks ― are expanding their business portfolio to seek structural changes and grow as general operating firms beyond trading, industry officials said Wednesday.
The three firms have been investing in new projects, which include operating a gas field, producing palm oil and running a rental business, to overcome rising trade barriers and respond to changing market needs.
POSCO International, the trading arm of POSCO, posted an operating profit of 180 billion won ($150 million) in the second quarter, buoyed by the rise of sales from a Myanmar gas field.
About 74 percent, or 133.4 billion won, of that profit came from the gas project, according to the company.
POSCO International is also ramping up efforts to secure a leading spot in operating overseas grain terminals.
In February, the company signed a deal with Ukraine's Orexim Group, acquiring a 75 percent stake in a terminal in the port of Mykoliv in southern Ukraine, one of the country's main export hubs.
In August 2018, it also signed an agreement with Vietnam's Tan Long Group to expand its presence in the Vietnamese grain market.
“POSCO International aims to become Korea's largest food resources company capable of handling 20 million tons of food within the next 20 years,” a company official said. “By 2030, we plan to increase food sales from 1.2 trillion won to 5 trillion won.
The investment in new projects comes in line with Chairman Choi Jeong-woo's management strategy to build an integrated energy value chain.
LG International posted an operating profit of 50.6 billion won in the second quarter, down 7 percent from a year earlier.
However, the company's distribution sector improved by about 70 percent to 35.5 billion won in the period.
“Thanks to increased shipping and warehouse and distribution (W&D) volume, we were able to meet the market's expectations in the second quarter,” an LG International official said.
“We will continue to secure profitability and pursue sustainable growth by investing in logistics and palm oil operations.”
LG International produces 80,000 tons of palm oil a year in Indonesia and plans to expand capacity to 180,000 tons a year.
“Last year, we bought two additional palm oil plantations in Indonesia,” the official said. “If the two newly added farms operate regularly by the end of this year, we expect to increase our production capacity.”
SK Networks, the trading arm of SK Group, logged a 52.1 billion won operating profit in the second quarter, up 144.3 percent from a year ago. The company's expansion into rental businesses has played a pivotal role in boosting the earnings.
The company has secured 1.7 million subscribers, up 16.8 percent from a year earlier, and recently launched home appliance rental services in Malaysia. Its acquisition of the AJ Rent-a-car business in 2018 has also increased earnings.