Samchully's Expanding
Biz Horizon

From city gas to new and recycled energy, new business lines
to pay off in due course

Samchully, a city gas supplier in Gyeonggi Province and the Incheon area, has begun to see its new operation in the supply of city gas turning profits in the second quarter.
The company reported its Q2 sales are up 11.5 percent YoY at 563 billion won with operating profit rising 84 percent to 22.7 billion won and net profit climbing 149 percent to 21.5 billion won.
The city gas suppler attributed the operational improvement to an increase in the number of new gas users in the district and gas for industrial use. Industry sources said the turnaround at Samchully is owed to the surge in its new collective energy business, which the company took up not long ago, reducing further investment and generating profit.
The company expanded its gas supply areas to Gwangmyung City and Pyeongtaek near Seoul and jointly set up HUCES, a district heating firm with Korea District Heating Co., to strengthen its hold on the new business venture. The new joint-venture company began to turn a profit from early this year as the number of households who receive their energy supply from the Gwangmyung combined heat and power plant rose to 14,000 homes from 8,000 homes only a short time ago, the company said.
Samchully's future growth would depend heavily on how well its collective energy supply business will do in the days ahead as the company projects its sales to rise to 5 trillion won annually in 2015, with 30 percent of the revenue coming from the collective energy supply operation side.
The company expanded its business areas to the eatery business in 2008 by setting up SL&C to operate fusion restaurants Chai 799 in China and Thailand. The company has also been engaged in talks with POSCO Power, Korea Hydro & Nuclear Power Co. and Hwasung City to set up a plant for battery power, a new and recycled energy business.
Samchully has been energetically pushing its oil and gas exploration projects in a number of areas in the world including Iraq, the Gulf of Mexico and Uzbekistan, among others.
The company also took over Daeyang Biotech, a company with technologies for city gas pipeline construction and sewerage treatment know-how. The new business areas were added to the company's operation since 2007 when Chairman Lee Man-deuk hired Han Joon-ho, former head of the Small and Medium Business Administration as chairman to direct the company's new business lines. Han was also head of the Planning and Coordination Office of the Ministry of Knowledge Economy.
A Samchully official said the company has been expanding its business territory so far, but the new business lines will start producing positive results soon.
The securities industry has also noticed the changes in Samchully's business lines. An analyst with Samsung Securities said the Gwangyang collective energy business is turning around and has started to generate profits and the economic conditions would not effect the company's gas supply business because its customers are mainly individual homes, not industrial plants, and are not easily susceptible to economic conditions.
Another securities analyst said the depreciation expenses were large last year and from this year they will be much smaller, helping profits to grow. nw

Chairman Han Joon-ho of Samchully Co. in charge of new businesses including collective energy plants and new and recycled energy development.

Photo on Courtesy of Samchully Group