The board of shipbuilding giant Hyundai Heavy Industries (HHI) has announced its decision to break up its business interests to create four separate companies, including a free-standing construction machinery arm.
Moving forward, the provisionally named company Hyundai Construction Machinery will be operated as a separate business entity, alongside two other spin-offs: Hyundai Electric and Hyundai Robotics.
The new HHI will retain its core businesses in shipbuilding, offshore, industrial plant, and engines, while other minor divisions will become subsidiaries through cross-affiliate equity arrangement.
An official from HHI said: “Despite the different natures and sectors they operate in, our existing non-shipbuilding divisions have been operated and managed under an umbrella of shipbuilding division.
“In the process, we have witnessed inefficiency in the management of company. Due to the structure, divisions with a smaller portion of company-wide sales have not been well positioned to secure independent competitiveness.”
The restructuring of the company’s businesses is scheduled to take place in the first half of 2017.
HHI is expected to list these companies on domestic stock exchanges, with funds generated from the share sale directed back into HHI.
The official added: “The spin-off is one of the final measures in the $2.98bn (KRW 3.5 trillion) management improvement plan we drafted for creditors in May this year. By carrying out the plan pre-emptively, we aim to regain trust from the market and lay the solid foundation for take-off.”