SK Group Chairman Chey Tae-won emphasized the need for a thorough response in line with changes in global market conditions. He mentioned the need to speed up SK Group’s business rebalancing and expressed his will to actually increase the intensity of restructuring.
SK Group held the ‘2024 CEO Seminar’ from the 31st to the 2nd of last month with about 30 top executives, including SK Chairman Chey Tae-won and SK Senior Vice Chairman Choi Jae-won, attending. In his closing remarks on the 2nd, Chairman Choi emphasized, “It is highly likely that a major expansion of the AI market will arrive around 2027,” and “if SK is to seize growth opportunities, it must quickly complete the ‘operational improvement’ that is currently in progress.” Operation improvement, which SK refers to, refers to the process of securing the company’s competitiveness, including cost reduction and efficiency.
▲ The top topic is ‘hypertrophied group diet’
The biggest topic of this seminar was SK Group’s portfolio rebalancing. It refers to the restructuring of SK Group, which has grown in size due to frequent mergers and acquisitions in recent years.
In this regard, SK explained that the group’s net borrowings, which reached 84 trillion won at the end of last year, began to decline in the second quarter of this year through processes such as profit and loss and cash flow improvement and asset sales. At the end of the third quarter, net borrowings decreased to 70 trillion won. The number of affiliates, which was 219 as of the end of last year, is expected to decrease by more than 10% by the end of this year.
In a special session of the actual seminar, Kim Dong-hwan, CEO of Sampro TV, said, “Before rebalancing, SK had problems such as competitive overlap and overinvestment among affiliates. At some point, buying the company seemed to have become a goal in itself.” He pointed out sharply.
The CEOs confirmed that the ‘operational improvement’ activities that have been carried out so far have begun to produce results in stabilizing the financial structure. In the future, we plan to pursue ‘Operation Improvement 2.0’ to improve operational capabilities such as manufacturing and marketing. Choi Chang-won, chairman of the SK Supex Pursuit Council, said, “The results of our proactive rebalancing and operational improvement efforts are becoming visible since the second half of the year,” and “If we endure the current difficult times, opportunities to take on greater challenges and leap forward will open up in the future.” “He encouraged the CEOs.
This seminar also provided time to introduce the factors that enabled SK Hynix to overcome the crisis of recording an operating loss of close to KRW 8 trillion last year and leap forward as a market leader by recording an operating profit of KRW 7 trillion in the third quarter of last year. SK Hynix CEO Kwak No-jeong said, “This year’s performance improvement was not simply the result of taking advantage of the semiconductor market recovery.” CEO Kwak said that ▲a bold decision to build Cheongju M15, a NAND flash production base, into an HBM production line ▲maximization of profitability through data-centered decision making ▲an organizational culture that freely expresses opinions with a one-team spirit led to an opportunity for a turnaround. explained.
▲Taewon Choi “Need to improve constitution with AI”
On this day, Chairman Choi emphasized ‘operational improvement’ as the group’s way of working.
He said, “Operation improvement does not simply mean cost reduction and efficiency. It is a process of securing fundamental competitiveness,” and “It is a process of securing fundamental competitiveness,” and added, “Entrepreneurship” and “communication with stakeholders,” which are not included in financial statements but are core elements of management, are “We must attach importance to it,” he emphasized. At the same time, he said, “In order to advance operational improvement, it is necessary to make good use of AI,” and “We need young members and leaders to suggest operational improvement plans that incorporate AI to improve company policies and systems, and provide compensation commensurate with performance.” “he said.
Regarding the direction of the AI business, Chairman Choi said, “We must expand the group’s AI business to a global scale by creating the cheapest and best AI data center through cooperation among group affiliates and with external partners.” Future tasks include strengthening AI chip competitiveness in semiconductor design and packaging, creating customer-based AI demand, and accelerating the energy solution business in preparation for a surge in power demand.
▲Discussed ways to strengthen export competitiveness at the group level
Executives agreed that a strategy to target global markets and expand exports is needed in the future. We decided to make special efforts to support not only SK affiliates but also small and medium-sized partners in strengthening their global competitiveness.
SK Group recorded exports of 96.8 trillion won last year. This corresponds to 12% of Korea’s exports (KRW 828 trillion). SK Innovation, which exported 59 trillion won last year, decided to further increase exports by expanding high value-added products and developing new markets such as Southeast Asia and Central and South America. SK Hynix has decided to continue to expand its export volume, which recorded 27 trillion won last year, focusing on HBM, whose demand is rapidly growing along with the development of the AI industry.
The CEOs also agreed that a group-level support system is necessary for entering overseas markets and diversifying exports. We also discussed ways to develop innovative products through cooperation between various business value chains and strengthen export competitiveness using ‘solution packages.’
Reporter Jeon Hyo-seong zeon@wowtv.co.kr
