April 18, 2024

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[THE INVESTOR] Less than a month since Hyosung Group Chairman Cho hyun-joon officially took the baton from his father S.R. Cho to lead the Korea’s textile giant, the company said Friday its annual operating profit exceeded 1 trillion won ($870 million) for the first time.

Improved earnings are expected to strengthen the hand of the junior Cho, who vowed to nurture Hyosung into a global power when taking office in early January. 

Hyosung Group Chairman Cho Hyun-joon(third from left) visits the company’s polyester-manufacturing plant in Gumi, North Gyeongsang Province, Jan. 4.

The nation’s largest synthetic fiber maker said its annual sales inched down 4.2 percent on-year to reach 11.92 trillion won in 2016. Operating profit hit 1.02 trillion won in 2016, a 7 percent gain from a year earlier and net profit was down 9.6 percent on-year at 475 billion won.

Gains in operating profit came from various businesses, the company said. Textile including spandex contributed 31 percent of the operating profit, industrial materials including tire cord, 22 percent, heavy industries, 19 percent, and chemicals, 15 percent, respectively.

Since the junior Cho became president of the group in 2007 and took leadership of its textile business, Hyosung’s earnings have seen continuous growth.

“Chairman Cho Hyun-joon’s strategy to expand productions in Vietnam, China and the US and to focus on development of distinctive technology and product quality was effective,” a company official said.

“This year, we will enhance our globally leading position in products such as spandex, tire cord and fabric for airbags.”

Hyosung Group has 114 subsidiaries under seven major business wings -- textile, industrial materials, chemicals, heavy industries, construction, trading and finance.

The company is the world’s largest spandex maker, with its products taking up about 32 percent of the global market share by production volume. Hyosung developed its own technology to produce spandex in 1992 and has maintained its No. 1 position in the global spandex market since 2010.

Another Hyosung business, making tire cords, thread for seatbelts, and fabric for airbags and car mats, is expected to grow with an expansion of the global auto market, according to the company’s latest report. Operating profit in industrial materials jumped to 218.6 billion won in 2016 from 147 billion won a year earlier.

In the company’s heavy industries businesses, Hyosung expects rising demand in power generation in emerging markets including South America, Africa and Asia due to rapid economic growth and industrialization.

Its chemicals business, manufacturing polypropylene and other materials such as nitrogen trifluoride for making semiconductors and display panels, will be expanded centering on the Chinese market, according to the company.

The 49-year-old chairman majored politics in Yale University in the US and earned master’s degree in politics from Keio University’s graduate school in Japan.

A leadership glitch for Cho came on Jan. 15, 2016, when he was sentenced to 1 1/2 years in prison, three years of probation and 120 hours of community service for embezzling 1.6 billion won to pay his credit card bills.

On the same day, judges also sentenced his father to three years in prison and a 136.5 billion won fine by the Seoul Central District Court on charges of evading 135.8 billion won in taxes and accounting fraud.

The Chos, with Hyosung Group, have filed an appeal against both sentences, and is currently waiting for a trial date.

By Kim Yoon-mi (yoonmi@heraldcorp.com)