S.Korea's HD Hyundai chairman: We can’t rely on bad profits

Kwon Oh-gap, chairman and co-CEO of South Korea's HD Hyundai Co., has ordered his company not to rely on “bad profits” gained from temporary changes such as fluctuations in foreign exchange rates and market conditions.

He advised management not to get intoxicated on external variables and incorrectly perceive the company as experiencing tremendous growth, warning against complacency despite the recent rebound in the performance of affiliates like those of shipbuilding and construction machinery.

HD Hyundai on Sunday quoted the chairman as telling subsidiary executives at a meeting on Friday not to rely on "bad profits" that guarantee no global competitiveness and future business lines.

“A company secures global competitiveness and future business through its own hard work and efforts, and only the profits generated through them are good profits,” he added. "Consider what kind of future to show employees and focus on future business."

Chairman Kwon urged his company not to slack off in the second half of the year despite the recent success of subsidiaries such as those of shipbuilding and construction machinery. On Thursday, HD Hyundai announced its second-quarter results of 15.6 trillion won ($12.2 billion) in sales and 472.6 billion won in operating profit.

HD Korea Shipbuilding & Marine Engineering, an intermediary holding company in shipbuilding, returned to the black with operating profit of 71.2 billion won in the second quarter thanks to a rise in vessel prices that began last year. In construction equipment, HD Hyundai Construction Equipment Co. saw operating profit soar 163% to 96.6 billion won and HD Hyundai Infracore Co. 87% to 162 billion won thanks to brisk sales.

In addition to Kwon, the presidents of major affiliates attended the meeting including HD Hyundai co-CEO Chung Ki-sun, HD Korea Shipbuilding & Offshore Engineering Vice Chairman Ka Sam-hyun, and HD Hyundai Heavy Industries Vice Chairman Han Young-seok. They discussed each sector, eco-friendly and digital trends, and recruitment of talent.

Write to Mi-Sun Kang at misunny@hankyung.com