Kumho Asiana Riding High

Conglomerate reorganizes its structure to expand its operations
The Kumho Asiana Group has decided to set up a two-top system with Kumho Petrochemical and Kumho Industry leading the new system as holding companies to rationalize its business structure, the group announced recently.
Under the new system, some of its affiliate firms will be merged to set up a new growth engine for the group and the group will beef up its overseas operations to advance its globalization effort.
The announcement of the new business plan for the group came during the investor relations session held at the DLI Building in Yeouido, Seoul on March 7. Top executives of the group's major affiliates attended the event including Park Chan-bup, vice chairman of Asiana Airlines, Kim Hong-ki, president of Kumho Petrochemical, and Oh Nam-soo, president of the strategic headquarters of the group.
It was known all along in the business community that the group was about to turn its structure to a two-top system, but the group made it official by announcing the plan in public for the first time.
Under the new system, affiliates with similar business nature will be put under the same structure to make the group's operation simpler and for responsible management build-up.
Under Kumho Petrochemical, Kumho Rent Car (49.51), Kumho Tire (34.19), Asiana Airlines (14.61), Kumho Polychem (50), Kumho Life (31.74) and Kumho B&P (39.57) have been assigned. Included under Kumho Industry are Asiana Airlines (31.6), Incheon Airport Energy (30), Kumho Finance (10.8), Kumho Life (20.6), Hankook Integrated Logistics (47.8), and Asiana Leisure (49.7).The figures represent stakes held by holding companies.
The group also announced that its investment in facilities would total around 1.94 trillion won this year out of which 863,6 billion won has been set aside to be invested in the area of M&A to secure new growth engines. The investment this year is up 60.4 percent from last year and investments in the new business area are up 174 percent from 2005.
The group plans to expand its overseas business area through its tire, construction and rent car affiliates focused on countries like Vietnam and China. Kumho Tire will launch the construction of its third tire plant with the annual production capacity of 3.15 million pieces in China during May and its second tire factory with the annual production capacity of 5.25 million pieces in Tianjin, China, is scheduled for completion in July. In September, the group will launch the construction of the Kumho Chinese Technology Research Institute in China. Kumho Industry's construction unit is scheduled to start the construction of Asiana Plaza in Vietnam sometime in June and its express transportation unit has set up an affiliate in China and takes over a transportation firm in Tianjin. Kumho Rent Car will set up agencies in a number of locations in China, including Qingdao and Tianjin in July, Nanjing in October, and Shanghai in November.
The group recorded 11.114 trillion won in sales revenue last year with 815.5 billion won in operating profit. The group projected its sales revenue to increase 15.5 percent to 12.84 trillion won and operating profit to amount to 1.21 trillion won this year.
Choe Ji-wan, research staff with the NH Investment and Securities, said the group's outlook is bright this year and is likely to see its net profit increase this year.
The group plans to expand its logistics business through its affiliates like Asiana Airlines, in the areas of land transportation, rent car, and manufacturing to build a nationwide business network to achieve a synergistic effect in tandem with the logistics capacity the group already operate to the extent that the industry would be a new growth engine for the group.
The group also plans to widen its leisure business sector by expanding the condo complex on Jeju Island and building new golf courses to be ready for a five-day week working system in the country, a system likely to spread to all industries in the near future. Kumho Asiana will step up its car rental business from passenger cars to trucks and dealings in used cars around the country. nw