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GS chairman stresses crisis management

GS Holdings plans to  spin off energy division

GS Group chairman Huh Chang-soo on Wednesday urged company executives to innovate and challenge growth fields to triumph over escalating economic turmoil.

“Frontrunners in every industry have established an innovative and distinct business structure with no exception,” Huh said. “When the storm cleared away, companies that have turned the crisis into opportunity will make a leap.”

Speaking at a meeting with group executives in Seoul, Huh underscored the growing risks of business conditions in the wake of a global slump as Korea’s eighth-largest conglomerate spurs overseas expansion.

“Even before the impact of the 2007-8 financial meltdown disappears, another looming economic crisis is exacerbating business conditions, directly affecting our expanding overseas operations,” Huh said.
GS Group chairman Huh Chang-soo
GS Group chairman Huh Chang-soo

About half of GS’s total revenue is generated offshore, he noted. Exports take up nearly 60 percent of sales of GS Caltex, the group’s refining unit. Other subsidiaries such as GS Engineering & Construction, GS Electric and Power Services and GS Retail are scaling up operations abroad.

“Poor crisis management never enables us to gain bigger market share and maintain growth pace. We should be more focused and carry out our tasks in a properly managed way,” Huh added.

The eurozone has been floundering in a sovereign debt crisis. The stalling U.S. economy is stoking spillover fears for the regions’ banking industry and the broader global landscape.

Concerns flare up that Corporate Korea would soon a liquidity crunch as sagging demand from rich economies dampens the export outlook for local firms.

According to FnGuide, a financial data provider, the annual excess cash flow forecast of 83 listed firms plunged 42 percent to 43 trillion won ($38 billion), from 74.5 trillion won estimated at the end of July.

In efforts to rein in potential cash shortages, large firms are scrambling to issue more corporate bonds and secure short-term loans.

In the meantime, the conglomerate said on Wednesday that a new subsidiary specializing in energy will be established.

The new company, GS Energy, will specialize in resource exploration and renewable energy projects. The company will be wholly owned by GS Holdings. GS Holdings’ 50 percent stake in GS Caltex will be transferred to GS Energy.

By Shin Hyon-hee (