Major affiliates of the once troubled Dongbu Group have returned to profit after two years of restructuring efforts to tackle a liquidity crisis, industry sources said Monday.
Dongbu Group, Korea's 28th-largest conglomerate whose affiliates range from insurance and construction to steelmaking firms, had been under pressure from its creditors to improve its shaky financial status.
Headquarters of Dongbu Group in Seoul (Yonhap)
Dongbu's self-rescue process began in 2013, when the group's main creditor, the state-run Korea Development Bank, made an offer to POSCO, the nation's biggest steelmaker, to acquire its two units. The package deal to acquire Dongbu Steel's Incheon plant and Dongbu Power Dangjin, however, fell through in July 2014.
POSCO's withdrawal from the deal led to a downgrade in the credit ratings of Dongbu's key affiliates, including Dongbu Engineering & Construction, and deepened the group's overall cash shortage.
In an effort to restore fiscal soundness, Dongbu sold flagship units, and major arms of the group underwent court receiverships.
The restructuring process virtually ended in April 2015 as LG Chem, the country's top chemicals company, took over Dongbu Farm Hannong, a pesticides and fertilizer maker under the group.
Dongbu Insurance, a nonlife insurer under the group's wing, posted an operating profit of 128.2 billion won ($108.8 million) in the first quarter of the year, according to the company.
The group's five tech units -- which include Dongbu HiTek, the country's only full-fledged chip foundry firm -- have turned to the black since last year. Foundry manufacturers refer to those that make chips for other companies and do not have a semiconductor fabrication plant.
In the first quarter, Dongbu HiTek made a turnaround in both operating profit and net profit from a year ago on the back of increased sales of audio chips for smartphones and chips for touch-screen panels, the company said.
The firm's operating profit reached 40.7 billion won in the January-March period, while sales stood at 183.9 billion won, it said.
"Profitable products can be increased by specializing in technology centered around analogue processing and improving cost structures through innovating the manufacturing process," a company official said. (Yonhap)