With chairman's return, Hanwha explores 'next engines'

Hanwha Chairman Kim Seung-youn, left, and Hanwha Solutions President Kim Dong-kwan / Korea Times file

By Kim Hyun-bin, Kim Yoo-chul

Upon the return of Chairman Kim Seung-youn, Hanwha Group is expected to speed up efforts to explore its best possible opportunities to achieve both “organic” and “inorganic” corporate growth.

In terms of business strategies, organic growth allows firms to boost sales via internal efforts helping them cut overhead and any management complexities. But inorganic growth relies on mergers and acquisitions (M&As) that boost a company's total assets, liquidity and liabilities.

As Chairman Kim will handle top posts of the group's key affiliates including Hanwha Solutions and Hanwha Engineering & Construction, the group is widely expected to put a bit more priority on “organic growth” as this strategy reflects the quality of leadership and commitment to long-term development goals.

Because organic growth is well-translated into a broad range of benefits including increased output, new product development and improved investor confidence, the conglomerate is looking to widen its customer base, according to sources.

Hanwha's core strengths lie in manufacturing. Based on those strengths, it is planning to invest more in aerospace, mobility, solar cells and other eco-friendly businesses. The group's corporate structure largely comprises of the financial, manufacturing, construction and leisure sectors.

More specifically, Hanwha aims to set foot in the liquefied natural gas (LNG) shipbuilding market and to strengthen the conglomerate's manufacturing sector.

The conglomerate has been operating a taskforce to expand its solar panel business and has been eyeing to acquire and expand investment in other eco-friendly business sectors to fuel future growth.

“Hanwha has been seeking to increase synergy in the manufacturing sector especially within the eco-friendly business sector,” an industry source told The Korea Times. “As a long-term plan, Hanwha may be interested in acquiring major stakes in the country's top-tier shipbuilder to increase their manufacturing sales portion,” an industry official said, Thursday.

Hanwha was in the process of recruiting personnel from other local LNG shipbuilding companies.

“Regarding the specifics, I would say Hanwha is said to be recruiting experts from Daewoo Shipbuilding & Marine Engineering (DSME),” the source said.

On a related note, Hyundai Heavy Industries Holdings has received the green light from antitrust authorities in some countries for its planned acquisition of DSME and is awaiting approval from Korea, EU and Japan. In 2008, Hanwha sought to acquire DSME, which abruptly fell through at the last minute.

Back in 2014, Hanwha sought the acquisition of Samsung affiliates. It acquired Samsung Techwin and Samsung Thales, creating great synergy to grow into the country's largest defense manufacturer.

According to data released by the Financial Supervisory Service (FSS) Hanwha Group's 2019 financial data states that the conglomerate's financial sector makes up 45.8 percent of the group followed by manufacturing at 41.8 percent, and construction and leisure services at 10.4 percent.

“Organic growth could come from new business targets because any enhancements in technology and clients' needs offer more ways to lead the growing markets. I would say LNG-oriented business models are something Hanwha could successfully handle given its strengths in manufacturing,” another source added.

Hanwha Group denied the report, claiming it has not sought to recruit experts from DSME or to acquire a major shipbuilding company at this point in time.