Hyun-bum Cho, chairman of Korea & Company Group, returned to management on July 30 after being released on parole. He now faces significant challenges in addressing the company's operational issues.
Among the pressing tasks are the normalization of Hanon Systems, which was acquired last year, and creating synergies among the group's subsidiaries. Additionally, external challenges such as U.S. tariffs, global economic slowdown, and geopolitical risks loom large.
Cho was released from the Hwaseong Vocational Training Prison in Gyeonggi Province, a month ahead of his scheduled release date of September 5.
Previously, Cho was arrested on charges of embezzlement and breach of trust amounting to over 20 billion won. He was detained in March 2023 and released on bail in November of the same year. However, he was sentenced to three years in prison in May 2023 and was later sentenced to two years on appeal, with the Supreme Court confirming the sentence in May 2024.
With Cho's return, the group's long-delayed mid- to long-term strategy and investment decisions are expected to gain momentum. The primary challenge remains the operational normalization of Hanon Systems, which requires restoring profitability and improving its financial structure while also creating synergies with other subsidiaries, including Hankook Tire.
Hanon Systems, now a subsidiary of Hankook Tire, partially improved its financial structure through a capital increase at the end of last year. However, as of the first quarter of this year, its net debt stood at approximately 2.94 trillion won, with net interest expenses accounting for about 36% of its operating profit of 97.2 billion won. A significant portion of its earnings is being consumed by financial costs.
The domestic and international business environment remains challenging. The global automotive market is slowing, and rising raw material prices are adding pressure. Additionally, the European Union's imposition of anti-dumping duties on tires for passenger vehicles from China has emerged as a new variable. A 4.3% tariff will be applied to products produced by Hankook Tire in China, which, while lower than the 24.4% imposed on domestic competitors, will inevitably reduce price competitiveness for Chinese-produced goods.
The group's future investment direction is also awaiting Cho's decisions. Hankook Tire is set to expand its North American market presence with a focus on high-inch and electric vehicle tires, coinciding with the completion of its factory expansion in Tennessee in the second half of this year. Furthermore, as Korea & Company begins internal feasibility studies for acquiring Lotte Rental, attention is on whether Cho's return will lead to active participation in the acquisition process.
Acquiring Lotte Rental would allow the group to expand its business portfolio beyond tires and automotive thermal management systems to include mobility services. However, this would require additional significant financial investment following the acquisition of Hanon Systems, necessitating careful consideration of financial burdens and investment returns.
A representative from Korea & Company stated, "We expect Cho to return at an appropriate time after considering long-term strategies. Given the deteriorating domestic and international business environment, there are many issues requiring strategic judgment from a mid- to long-term perspective, so we look forward to a swift return of leadership."
* This article has been translated by AI.
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