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Hyundai Genuine Unveils Business Reorganization Plan to Maximize Synergy between HCE and Doosan Infracore
Hyundai Genuine, Hyundai Heavy Industries (HHI) Group's intermediate holding company overseeing the construction equipment business, announced a business reorganization plan to achieve the goal of "ranking among the global top 5 with sales of KRW 10 trillion by 2025."
On August 25, Hyundai Genuine held its first integrated investor relations conference since its establishment to announce detailed action plans to maximize intercompany synergy between its two subsidiaries, Hyundai Construction Equipment (HCE) and Doosan Infracore.
The business reorganization scheme largely consists of three parts: Hyundai Genuine's acquisition of HCE’s material handling equipment business; HCE's purchase of stakes in overseas manufacturing corporations; and Doosan Infracore's capital reduction without pay-out and equity financing.
Hyundai Genuine is scheduled to acquire HCE's material handling equipment business in December, which manufactures forklifts and other industrial vehicles, with a plan to heavily invest in and foster this business in order to further strengthen market competitiveness.
HCE will acquire the construction equipment corporations located in China and Brazil that are currently owned by Korea Shipbuilding & Offshore Engineering (KSOE) and improve their profitability through sales and production strategies tailored to the respective local markets.
HCE will also absorb Hyundai Core Motion's after-sales service department and reinvest profits from sale of parts to secure business competitiveness.
Doosan Infracore, which has newly joined HHI Group, will work on the improvement of its financial structure through capital reduction without pay-out and equity financing.
To do this, it will hold an extraordinary general meeting for shareholders' approval of the plan to carry out capital reduction by means of reducing the face value of shares by 80% with no direct impact on the overall shareholder value, including shareholders' equity and the number of shares issued.
Subsequently, Doosan Infracore will issue new shares worth up to KRW 800 billion within the year.
Funds raised through the equity financing will be used for the acquisition of a 20% stake in Doosan Infracore China, repayment, digital transformation (DT) and R&D investments to develop new technologies such as eco-friendly technical capabilities for the future growth.
Separately, Hyundai Genuine also shared a blueprint to boost intercompany synergy within the construction equipment business.
As the intermediate holding company, Hyundai Genuine will identify areas where HCE and Doosan Infracore can generate synergy in the short and long term, with a view to ranking among the global top 5 with sales of KRW 10 trillion and a global market share of 5% by 2025.
In the short term, some 240 items will be selected that HCE and Doosan Infracore can jointly purchase to improve profitability through economies of scale.
In the mid to long term, the two companies will effectively leverage their respective strengths for complementary product lines, to ensure the fullest possible level of synergy.
By 2025, an integrated platform for excavators and wheel loaders will be developed through efficient utilization of the two companies' R&D resources, strengthening technological competitiveness.
In particular, Hyundai Genuine will work on the development of a hydrogen engine for construction machinery in connection with HHI Group's hydrogen push, while actively engaging in M&As, investments in startups and cooperation with academics to develop technologies of the future early on, including industry-leading solutions for autonomous and electric equipment.