Daewoo Electronics tries to bolster finances after acquisition

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Daewoo Electronics tries to bolster finances after acquisition

Daewoo Electronics, Korea’s third-largest electronics company, is aiming to go public in the next few years as it seeks to bolster its business portfolio and improve capital flow following its acquisition by Dayou Group last month.

The money-losing home appliance maker also expects to register a 5 percent operating margin by 2019 after turning a profit this year, the head of Daewoo Electronics said on Wednesday.

“We will try to lay the foundation to make a profit this year before we increase the rate of operating profit [from revenue] to 5 percent next year,” said Ahn Jung-gu, chief executive officer of Daewoo Electronics.

“After 2020, we will take Daewoo Electronics public in stock markets at home and abroad,” Ahn added.

Dayou Winia, a home appliance maker best known for its kimchi refrigerator Dimchae, bought an 84.5 percent share of Daewoo Electronics for around 120 billion won ($113 million) last month.

Daewoo and Dayou intend to pursue the operational model of Hyundai Motor and Kia Motors to maintain separate operations and share research and personnel without a complete merger.

“Dayou Group, which started as an auto parts supplier, will benchmark the way Hyundai Motor and Kia Motors are run,” said Ahn Byoung-deok, head of the strategic planning division at Daewoo Electronics. “The two will develop separately, and we don’t have any plan to merge.”

To turn around Daewoo Electronics, Dayou will sell non-core assets including a savings bank affiliate. Cho Sang-ho, vice president at Dayou, said that 78 billion won, the proceeds of selling Smart Saving Bank, will be channeled into improving the financial conditions of Daewoo at the end of next month.

When Daewoo’s financial status stabilizes, Dayou will also attempt to expand its presence in more future-oriented businesses such as supplying automotive parts for self-driving vehicles.

Executives from the two companies said they hope to cash in on the strengths that each business has developed. Dayou hopes to strengthen its electronics business at home and abroad through Daewoo’s overseas sales network.

Whereas Dayou Winia has a strong footing in the Korean kimchi refrigerator market, Daewoo Electronics manufactures refrigerators, televisions and washing machines for the Central and South American region.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]
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