Due to worsening performance, Hyundai Steel has entered into emergency management and will integrate its planning department and finance department. It aims to minimize expenditure by consolidating business planning, investment, and fund disbursement functions. Hyundai Steel is also reviewing plans to reduce investment in the sports sector.
According to a Hyundai Motor Group official on the 19th, Hyundai Steel is working on an organizational restructuring plan to merge its strategy and finance departments into a planning and finance department next month. Currently, the head of the strategy department is Executive Director Choi Sang-geon, and the head of the finance department is Executive Director Kim Kwang-pyeong. When the departments merge, it is expected that personnel changes involving key executives, including the heads of the departments, will also take place.
The strategy department sketches the overall business and makes investment decisions. The finance department oversees all financial and accounting matters. Hyundai Steel is taking steps to reduce unnecessary expenditure by merging the organization that spends money with the organization that manages funds.
Internally at Hyundai Motor Group, there have been criticisms that the planning and finance sectors of Hyundai Steel have been separated, leading to ineffective management of investments. Hyundai Motor has a unified planning and finance system. Vice President Lee Seung-jo, recognized as a notable financial expert within the group, leads the planning and finance department as both Chief Financial Officer (CFO) and Chief Strategy Officer (CSO).
Suh Gang-hyun, president of Hyundai Steel, who is pushing for this organizational restructuring, has previously served as the finance department head at Hyundai Steel and as the planning and finance department head at Hyundai Motor.
Hyundai Steel is facing difficulties due to oversupply of Chinese products and a decrease in demand due to economic slowdown. Last year's sales totaled 23.2261 trillion won, down 10.4% from the previous year, while operating profit and net profit decreased by 60.6% and 72.2%, respectively. In the first quarter of this year, it recorded an operating loss of 19 billion won and a net loss of 54.4 billion won, marking a turn to deficit.
As performance worsened, Hyundai Steel announced in March that it would enter into an emergency management system and proceed with restructuring. It decided to sell its mid-sized business division that produces excavator parts, and the Pohang Plant 2 has been indefinitely suspended. They have also cut executive salaries by 20% and are offering voluntary resignations to all employees.
They are also reviewing plans to reduce investment in the sports business. Hyundai Steel operates the women's football team Incheon Hyundai Steel Red Angels and the men's archery team. Additionally, it supports sports facilities and youth football in several regions including Dangjin, where the steelworks is located. There are concerns that if Hyundai Steel reduces its investments, the competitiveness of various sports such as football and archery will decline.
A Hyundai Motor Group official noted, 'Hyundai Steel is pursuing the construction of an electric steel mill in Louisiana, USA, with an operational target of 2029,' adding that 'to secure construction expenses, it must significantly reduce expenditures and replenish its reserves over the next few years.'