Turnaround Strategy After Three Years of Losses: Yoo Taeho's First Letter to Shareholders
Securing New Growth Engines Centered on K-Beauty, Real Estate, and Energy
Cautious Stance Following EB Controversy... Extraordinary Shareholders' Meeting in Two Days
Taekwang Industrial, which has faced three consecutive years of losses and recently withdrew from its business in China, has unveiled a turnaround strategy. The company sent its first shareholder letter under the name of CEO Yoo Taeho, announcing a new growth strategy centered on three new core businesses: K-beauty, real estate, and energy.
On September 29, the company published the first shareholder letter from CEO Yoo, along with investor relations materials, on its website. In the letter, CEO Yoo stated, "The company now stands at a critical crossroads between decline and advancement," adding, "We will do our utmost to secure new growth engines and enhance corporate value." He also expressed, "I apologize for not communicating sufficiently with shareholders," and pledged, "Going forward, we will provide more transparent updates on our business status and direction of change."
CEO Yoo said, "The company's performance in recent years has not been satisfactory," and explained, "Unstable raw material prices, large-scale capacity expansions in China, and the global economic slowdown have all contributed to the deterioration of the petrochemical and textile sectors, resulting in operating losses for three consecutive years." He continued, "We made difficult decisions such as withdrawing from the cotton spinning factory, discontinuing the low-melting fiber business, and suspending operations at the China spandex plant." He emphasized, "These were by no means easy choices, but they were unavoidable for the company's sustainable future."
The letter also included plans for restructuring existing businesses and expanding around specialty products, new investments in K-beauty, real estate, and energy, the company’s stance on issuing exchangeable bonds (EB), and measures to strengthen board-centered management through amendments to the articles of incorporation.
Taekwang Industrial identified K-beauty as a key growth driver. The company defined its investment in Aekyung Industrial not merely as a financial move, but as the starting point for a full-scale entry into K-beauty. The company plans to establish a business foundation that can expand across the entire value chain, from cosmetics manufacturing and sales to original equipment manufacturing (OEM), original design manufacturing (ODM), and sourcing of raw materials and components.
The second pillar is real estate. As its first case, the company is pursuing the acquisition of the Courtyard Marriott Namdaemun Hotel, aiming to secure stable cash flow by leveraging the reliability of a global brand and a prime urban location. Starting with this, the company plans to expand its real estate development and operations portfolio to strengthen both stability and growth potential. This is a strategic move to diversify its manufacturing-dependent structure and to establish sustainable, asset-based revenue streams.
The third pillar is entry into the energy business. Given the high energy consumption inherent to manufacturing, the company aims to go beyond self-consumption and secure new revenue opportunities as an energy business operator. Taekwang Industrial stated that it will achieve both stable energy procurement and cost reduction in line with global eco-friendly trends such as carbon neutrality policies. This is seen as a challenge to create new revenue streams that go beyond the limitations of the existing petrochemical and textile businesses.
The letter also addressed concerns over funding for these investments. Previously, Taekwang Industrial sought to issue exchangeable bonds (EB), but faced conflict due to an injunction filed by some shareholders. Although the court dismissed the case on September 10, the company stated, "We will carefully consider the best course of action, taking into account shareholders and market conditions," opting for a cautious approach rather than pushing ahead unilaterally.
Additionally, at an extraordinary shareholders' meeting scheduled for October 1, the company plans to amend its articles of incorporation to include 'cosmetics manufacturing and sales, real estate development, hotel and resort operation, and energy-related businesses,' thereby establishing the legal foundation for its new business ventures. Furthermore, the company intends to strengthen board-centered management by newly appointing Lee Boohee, who oversees the restructuring of the textile and petrochemical divisions, as an internal director.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
