[Decision of the Chairman] SK Group Abandons 'Cash Cow' for the Future

[Asia Economy Reporter Park So-yeon] SK Group is completing a portfolio suited for the 4th Industrial Revolution era through bold decisions that are difficult to make under a professional management system. Their strategy is to boldly divest current 'cash cows' that generate steady revenue if they do not align with future strategies, and focus on future investments.

According to related industries on the 13th, SK Nexilis, a copper foil manufacturing subsidiary of SKC, is considering building its first overseas factory with potential sites in the United States, Europe, and Asia.

Since the parent company SKC and electric vehicle battery production affiliate SK Innovation have local production facilities in the US and Europe, it is known that SK Nexilis is highly likely to expand into nearby regions as well.

SK Nexilis is the world's number one company producing copper foil, a core material for electric vehicle batteries. The company has been continuing aggressive investments, announcing factory expansions twice this year.

In March, they announced an expansion with an investment of 81.5 billion KRW, and just three months later in June, they decided on an additional expansion worth 120 billion KRW. Once the Jeongeup Plant 6, which began construction in August, is completed in the first quarter of 2022, copper foil production capacity will increase to 52,000 tons per year.

SK Nexilis is a recently acquired company by SK Group. SKC, a chemical affiliate, acquired it last year for 1.2 trillion KRW, which was 30% of its total assets. This was a move that transformed the traditional chemical company SKC into a 4th Industrial Revolution enterprise overnight.

Subsequently, SKC spun off its chemical business division and sold 49% of its shares to PIC, a subsidiary of Kuwait Petroleum Corporation, for 530 billion KRW. Additionally, SKC sold all its shares in SKC Kolon PI, a polyimide film manufacturer co-controlled with Kolon Industries, for 300 billion KRW.

Although the chemical business division and PI film business are sectors capable of generating steady cash flow for the time being, SK's internal circles evaluate this bold divestment and securing of new investment capacity as a business decision only an 'owner company' can make.

By discarding what needed to be discarded and focusing on 'selection and concentration,' they were able to increase future investment capacity.

An industry insider said, "If SK Nexilis expands overseas, the synergy effects will be significant in many ways," adding, "SK Group is completing growth momentum as a future mobility company through bold decisions and strong execution."