Hyundai Oilbank halts investment worth 360 billion won… “Inflation worsens profitability”
SK hynix also suspended investment in Cheongju semiconductor expansion… Samsung and LG to hold a meeting of CEOs
Recently, as concerns regarding the economic crisis have been growing due to the prolonged ‘three highs’ of high inflation, high interest rates and high exchange rates, a number of companies are putting off or withdrawing new investments.
Some companies convene a meeting of the president’s group to check the business status and come up with countermeasures.
According to industry sources on the 27th, Hyundai Oilbank held a board meeting the day before and decided to stop new investment in CDU (atmospheric distillation process) and VDU (reduced pressure distillation process) facilities worth 360 billion won.
CDU·VDU is a facility that produces petroleum products such as gasoline and diesel by boiling crude oil, and Hyundai Oilbank decided to invest in new facilities in May 2019.
As for the background of the suspension, Hyundai Oilbank said, “The environment has been difficult to continue construction due to the unexpected outbreak of Corona 19 and the rise in raw material prices due to deepening global inflation.”
He added, “The profitability of the investment has deteriorated due to rising costs, and it has become difficult to make reasonable predictions regarding the future of the raw material market, so we inevitably decided to stop the investment.”
Hyundai Oilbank has been pursuing an IPO, but in July of this year, the listing process was suspended due to increased global uncertainty.
Hyundai Oilbank is not the only case of withdrawing or withholding investment due to worsening business environment such as interest rate hikes and a sharp rise in the won/dollar exchange rate.
Hanwha Solutions announced on the 7th that it would withdraw its plan to establish a nitric acid-derived product (DNT) production plant worth 160 billion won.
DNT is a polyurethane raw material mainly used for furniture interior materials and automobile seats.
Hanwha Solutions cited a surge in raw material prices, a surge in investment costs due to inflation, and a worsening of raw material supply and demand as reasons for withdrawing the investment.
In June, SK Hynix also put a hold on investment to expand its new semiconductor plant (M17) in Cheongju, worth 4.3 trillion won.
Major conglomerates are convening an emergency meeting of presidents and seeking countermeasures in response to complex internal and external crises.
On the previous day, Samsung held a meeting of the presidents by convening the presidents of Samsung Electronics, electronics affiliates such as Samsung SDI, Samsung Electro-Mechanics, and Samsung Display, and financial affiliates such as Samsung Life Insurance.
Samsung Electronics Vice Chairman Lee Jae-yong did not attend the president’s meeting, but it is known that he had a luncheon with the president and discussed current issues.
LG Group also plans to hold a ‘Chairman’s Workshop’ chaired by Chairman Kwang-mo Koo this week and discuss management issues with the CEOs of major affiliates.
An official from the business community said, “The cost burden on companies is growing rapidly due to continuous interest rate hikes and inflation.
/yunhap news
