Korea’s HMM to invest $11 bn in ships, eco-friendly fuels

South Korea’s largest container line HMM Co. is set to spend 15 trillion won ($11.4 billion) by 2026 to diversify business amid the volatility of the global shipping industry and to become a major global player.

HMM said on Thursday it has decided to invest the money in vessels including container ships, terminals, logistics facilities, eco-friendly fuel and others.

The company earmarked 10 trillion, or two-thirds of the total, for investments in ships, terminals and logistics facilities. The company will expand its shipping capacity to 1.2 million twenty-foot equivalent units (TEUs) from the current 820,000 TEUs.

It plans to nearly double the number of bulk carriers to 55 units from the current 28 units while securing eco-friendly vessels such as liquefied natural gas (LNG)-powered ships to meet the target of carbon neutrality by 2050.

HMM, formerly known as Hyundai Merchant Marine, is poised to spend 5 trillion won on future strategic sectors including eco-friendly fuel and total logistics. The company will invest 150 billion won in digitalization such as the establishment of an e-platform and upgrading the enterprise resource planning (ERP) system.

It will set up an organization dedicated to digital strategies, to enhance the shipper management system and train maritime staff.

NO MEASURES FOR SHAREHOLDERS

HMM is not considering any measures for shareholders such as interim dividends and buyback of treasury shares currently, although the company is “seriously” concerned over the recent tumble in its stock price, its CEO Kim Kyung Bae said.

Shares of HMM rose to a high of 51,100 won in May last year, a threefold increase from the start of 2021. But the stock has shed 54% since then to close at 23,500 won on Thursday.

“If we make the company stronger, its fundamentals will improve and enhance shareholder value,” Kim said.

On the privatization of HMM, Kim said the company has yet to discuss plans with the largest shareholder and top creditor -- state-run Korea Development Bank (KDB).

HMM was taken over by KDB in 2016 after the company accumulated huge losses amid an industry slowdown.

KDB currently owns 20.7% of HMM as its largest shareholder, followed by state-run Korea Ocean Business Corp. (KOBC), which holds a 20% stake.

“We have not talked about the timing and method (of the privatization) with major shareholders,” Kim said. “Apart from the privatization, we will make necessary investments for sustainability.”

Meanwhile, its competitor SM Group’s recent purchase of HMM shares was seen as a simple investment, Kim said.

“SM Group has not made any special requests,” he said.

In June, SM Line Corp. and Korea Line Corp., two shipping arms under the SM Group, spent a combined 60 billion won buying shares in HMM. The group became HMM’s No. 2 shareholder with a 6.2% stake.

Write to Ik-Hwan Kim at lovepen@hankyung.com
Jongwoo Cheon edited this article.