Hyundai Group offers 10 year forecast for E&C

Rebuffing critics who say its bid for Hyundai E&C lacked a forward-looking plan, Hyundai Group yesterday released a so-called Vision 2020 for Hyundai E&C. Most notably, Hyundai Group said it expects Hyundai E&C to be in the top-five construction companies in the world and that its orders would soar 10 fold from 2009.

Hyundai Group projects that Hyundai E&C will pull in 150 trillion won ($132.6 billion) in orders by 2020, along with 60 trillion won in sales. Compared to 2009 figures, 150 trillion won represents a jump of close to 10 fold from 15.7 trillion won. Hyundai E&C recorded 9.3 trillion won in sales last year and operating profits of 5 trillion won.

“Some people are claiming that Hyundai Group had not offered a proper development plan for Hyundai E&C, but this is not true and we were not able to reveal the details due to a confidentiality clause - not because we weren’t ready,” said a company official.

The group also announced three growth strategies for Hyundai E&C. An important part of the projected figures is an improvement in engineering, procurement, construction and management, or EPCM for short.

The second strategy includes entering rapidly growing overseas markets such as Russia, Brazil, North Korea, United Arab Emirates, Saudi Arabia and India. Hyundai said it will concentrate on new growth businesses such as water treatment plants, “green” buildings, land reclamation, mobile ports, and “green” transportation.

The group said that from the 60 trillion won in sales it hopes Hyundai E&C will achieve by 2020, it expects 25 trillion won to come from synergy with Hyundai Group; Hyundai E&C will be independently responsible for 35 trillion won; strengthening EPCM will account for 6.1 trillion won; overseas markets will bring in 10.5 trillion won; and new growth businesses will be responsible for 8.4 trillion won.

Other plans included steering Hyundai Engineering away from an EPC-based business model to a specialized engineering company by diversifying its business portfolio.

For this to happen, Hyundai will transfer all non-engineering employees and departments from Hyundai Engineering to Hyundai E&C and reinforce Hyundai Engineering with employees that will work towards core technologies. Hyundai E&C will establish local subsidiaries in Russia and Brazil.

Hyundai Group also said it would turn the Seosan reclaimed land project in South Chungcheong into a tourist complex, establish a futuristic “green city” and build an industrial complex.

“Taking ownership of Hyundai E&C feels like getting back together with a family member who has been away for a while,” said a Hyundai Group official. “Based on the same corporate culture of Hyundai Group and Hyundai E&C, we will once again make Hyundai E&C into a globally leading company.”

The group’s chairwoman, Hyun Jeong-eun, said on Nov. 18 that 20 trillion won will be invested in Hyundai E&C’s growth.

She also promised that Hyundai Group will not fall into financial difficulties as a result of its takeover of Hyundai E&C.