"Preparing for a Greater Crisis"... General Trading Companies Launch New Businesses

Securing Growth Engines Through New Businesses Amid the COVID-19 Crisis

[Asia Economy Reporter Kim Ji-hee] The general trading industry is collectively declaring an 'expansion of new businesses' and is seeking new sources of growth. Amid difficulties caused by the novel coronavirus disease (COVID-19) pandemic, they aspire to turn the crisis into an opportunity through diversification of their business portfolios.

According to the industry on the 30th, POSCO International and LG Corporation recorded operating profits of 145.8 billion KRW and 49.9 billion KRW respectively in the first quarter of this year. These figures represent decreases of 11.3% and 6.4% compared to the same period last year. On the other hand, SK Networks posted an operating profit of 41.2 billion KRW, an 18.1% increase year-on-year, and Hyundai Corporation also recorded 14.2 billion KRW, up 15.2%.

Despite the contraction of global trade due to the spread of COVID-19, the trading industry is evaluated to have performed relatively well in the last quarter. However, there are considerable concerns that the impact will be fully reflected from the second quarter onward as the COVID-19 situation prolongs.

Accordingly, general trading companies plan to make an all-out effort to secure profitability by expanding new businesses. Although short-term performance declines are inevitable, they aim to prepare for greater crises such as the global economic downturn by securing new growth engines.

First, LG Corporation is focusing on new businesses including securing nickel ore off-take rights, which is a key raw material processed for secondary batteries, and developing information and communication technology solution businesses. They also plan to newly enter the healthcare-related business in the medical and health sectors to expand their operations. POSCO International intends to establish a foundation for new growth engines by strengthening businesses such as steel, exploration and production (E&P) of petroleum, food, and LNG, enabling proactive and flexible responses to external environmental changes.

An industry insider said, “The efforts of general trading companies to expand new businesses, mainly focusing on resource and food development, are gradually yielding results,” adding, “This crisis will accelerate the strengthening of profitability through entry into new businesses.”

This content was produced with the assistance of AI translation services.