Hyundai Motor Considers Selling Hyundai Rotem's Railway Business After Three Consecutive Years of Losses

KTX-Eum manufactured by Hyundai Rotem [Photo by Hyundai Rotem]

[Asia Economy Reporter Kim Heung-soon] Hyundai Motor Group is reportedly pushing forward with the sale of certain business divisions of its affiliate Hyundai Rotem, which is responsible for defense, plant, and railway businesses.

According to the financial investment industry on the 21st, Hyundai Motor is reportedly considering the separate sale of Hyundai Rotem's railway division, which has recently shown poor performance. It is said that discussions are underway regarding the price and method while considering the sale of shares to the German manufacturer Siemens.

As of the end of last year, Hyundai Motor is the largest shareholder, holding 33.77% of Hyundai Rotem's shares. Among Hyundai Rotem's business sectors, the railway division accounts for more than half of the sales but has recorded operating losses for three consecutive years: 41.7 billion KRW in 2018, 259.5 billion KRW in 2019, and 11.6 billion KRW last year. Due to this, there is a possibility that the underperforming business will be sold, and other sectors such as defense may be transferred to other Hyundai Motor Group affiliates or domestic companies. In the case of the defense sector, government approval is required for sale to overseas companies.

In this regard, both Hyundai Motor and Hyundai Rotem are distancing themselves by stating that they are currently verifying the facts. According to related industries, the value of Hyundai Motor's stake in Hyundai Rotem is estimated to be around 1 trillion KRW, including a management premium.