Korea’s major conglomerate SK Group on Monday congratulated itself for rationalized business structure gearing for new growth under a holding company structure it established a year ago.

Since SK Holdings was merged with SK C&C on 1 August last year for sole holding entity as a control tower over group-wide business focus, SK was able to focus better on new growth engines in biopharmaceutical, liquefied natural gas, semiconductor materials, as well as information and communication technology fields.

This year alone, major units of SK Group under the new holding company with an asset of 13 trillion won ($11.67 billion) have invested about 10 trillion won in total. The group’s semiconductor manufacturing arm SK Hynix Inc. pledged 6 trillion won, while the liquefied natural gas (LNS) and power generation unit SK E&S 2.5 trillion won and liquefied petroleum gas (LPG) provider SK Gas Ltd. 1 trillion won.

Such a sharp rise in investments by SK companies is in line with the group Chairman Chey Tae-Won’s management direction demanding them to preemptively make investments to survive in the fast-changing business environment, an unnamed official at the group said.

SK Materials Co., a semiconductor material company acquired by SK Holdings last year, is another SK company that has aggressively invested this year. In particular, the company that produces semiconductor materials including Nitrogen Trifluroride (NF3) has mostly invested in the semiconductor material business to expand the business and diversify product lineups. Following such an aggressive investment, SK materials recorded 38.8 billion won in operating profit and 116.5 billion won in sales in the March-June period of this year. It is expected to continue to make investment in the latter half of this year with plans to set up joint ventures with foreign companies and seek more merger and acquisition opportunities.

SK Biotek Co., a contract manufacturer of active pharmaceutical ingredients (API) owned by SK Holdings, and novel drug development subsidiary SK Biopharmaceuticals Co. have also made steady profits since they made bold investment decisions. SK Biotek posted 15 billion won in operating profit and 50 billion won in sales in the first half of this year, almost doubling from the same period of last year. The company bought a factory site at Myunghak Industrial Complex in Sejong City, a new town in central Korea, in November last year to expand production capacity to 800,000 liters in 2020 from the current 160,000 liters. It aims to rake in 100 billion won in sales this year and 1.5 trillion won in 2020.

SK E&S injected 2.5 trillion won to construct power plants across the country with an aim to secure sources of demand for its LNG. SK Gas also completed the construction of a dehydrogenation (PDH) factory, which produces polypropylene, a textile material, from propane gas, in Ulsan, South Gyeongsang Province, in the first half. The company invested total 1 trillion won in the project.

By Chung Wook

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