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(LEAD) HMM to invest US$11.4 bln to boost competitiveness

All News 15:42 July 14, 2022

(ATTN: ADDS more info in last 5 paras, photo)

SEOUL, July 14 (Yonhap) -- South Korea's leading container shipper HMM Co. said Thursday that it will invest 15 trillion won (US$11.4 billion) over the next five years to increase its capacity and secure diverse strategic assets as part of its efforts to become a top-tier global shipping company and achieve sustainable growth.

Of the total, the company will spend 10 trillion won on purchasing ships and acquiring other assets, with the remainder to be invested in business diversification projects.

The plan calls for expanding its shipping capacity to 1.2 million twenty-foot equivalent units (TEUs) in 2026 from the current 820,000 TEUs in a bid to strengthening its shipping capabilities.

The number of bulk carriers will be increased to 55 in 2026, up 90 percent from the present 29 vessels.

"As a global shipping company, HMM will put its top priority on the continuation of its growth in the future, which is the focus of this mid- and long-term strategy," company CEO Kim Kyung-bae said.

HMM will also seek to secure low-carbon vessels in a bid to cope with tougher environmental restrictions across the world and ramp up efforts to boost its digital competitive edge.

The corporate logo of HMM Co. (Yonhap)

In addition, the shipping line will set up a task force on environment, social and governance (ESG) management to achieve sustainable growth.

HMM's massive investment plan came after the shipping company pulled off a stellar performance in the first quarter of this year on high freight rates amid global supply chain disruptions sparked by the coronavirus pandemic and the war in Ukraine.

Net profit stood at 3.13 trillion won in the January-March period, nearly 20 times more than a year earlier, with sales more than doubling to 4.92 trillion won.

It marks the first time in 10 years that HMM has unveiled such a big investment plan. The shipping line has been under a creditor-led debt restructuring scheme since 2016, when it lapsed into a credit crunch following years of losses.

State agencies hold a controlling stake in HMM, with the state-run Korea Development Bank having owned the largest at 20.69 percent as of end-March. The Korea Ocean Business Corp. had a 19.96 percent interest, and the Korea Credit Guarantee Fund held 5.02 percent.

Asked about its privatization, Kim said the shipping company has yet to discuss the issue with its major shareholders, including its timing and method.

The company chief stressed HMM should make necessary investments in order to attain sustainable growth down the road regardless of the issue of its privatization.

Despite the news, shares in HMM closed 0.42 percent lower at 23,500 won on the Seoul stock market, underperforming the broader KOSPI's 0.27 percent decline.

This photo provided by HMM Co. on July 14, 2022, shows one of its container vessels. (PHOTO NOT FOR SALE) (Yonhap)


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