Kolon Global expedites growth by spinning off construction and auto business

○ Kolon Mobility, newly established auto company to function as a comprehensive mobility service provider

○ Construction business to concentrate on high-profit development businesses and eco-friendly energy

Kolon Global is accelerating the pace of its growth by spinning off its auto and construction business.

Kolon Global (CEO Jung-Il Kim) decided to spin off its auto business into the newly established Kolon Mobility Group from Kolon Global that operates in construction and trade at its board meeting on July 20.

The newly established Kolon Mobility Group will be importing cars such as BMW, Audi, Volvo, Jeep and Rolls Royce, while construction and trade, Kolon Sporex and other subsidiaries will remain under Kolon Global.

On January 1, 2023, the new entity will be spinning off from the surviving company at the ratio of 25 to 75 based on Kolon Global’s asset value; Kolon Mobility Group will be established and listed on the Korea Exchange.

The purpose of the spin-off is to accelerate growth in the future through prompt and efficient decision-making in a rapidly changing market environment. It reflects the company’s commitment to secure the engine for growth by focusing on its strengths and to enhance corporate and shareholder value.

Kolon Mobility Group’s vision is to reshuffle and expand the current business structure that focuses on imported car distribution and become a comprehensive mobility company. The company plans to create a multi-brand lineup by incorporating new SUV and EV brands, and extend the mobility value chain to include premium subscription service and used car business compared to the existing offline distribution-centered business model.

The automobile business served as a robust cash cow for Kolon Global, with car sales volume growing, in average, over 12% per annum since 2012 up to this year. Based on such stable performance, Kolon Mobility Group aims to strengthen its multi-brand position, expand its network, begin new businesses in related fields and develop an online platform after the spin-off; and such mid- to long-term innovation is anticipated to enhance the corporate value.

The new entity will also provide diverse services and products based on the synergy between the different businesses within the Group for improved customer value. It plans to strengthen its competitiveness by developing products and services in connection with diverse leisure businesses including hotels and golf clubs within the Group and introducing differentiated membership programs for customers.

To this end, Kyu-Ho Lee, head of Automotive Division at Kolon Global, will be appointed a joint and several representative of the new entity, and concentrate on developing future growth strategies, discovering new businesses and strengthening the financial capacity. Chul-Won Jun, head of BMW import business, will be the other joint and several representative of the entity and will be responsible for sales and after-service network management in the existing business areas. The goal is to generate KRW 3.6 trillion of sales and KRW 100 billion of operating profit by 2025.

Kolon Global, the surviving company, also sees this spin-off as an opportunity to rationalize investment. By proactively engaging in green energy business in addition to the orders on hand that exceeds KRW 10 trillion, it expects to achieve KRW 4 trillion of new orders, KRW 3.8 trillion of sales and KRW 290 billion of operating profit by 2025.

The construction sector, in particular, plans to focus more on highly profitable development projects such as joint development and internal projects based on the off-site construction (OSC) policy. It will also continue its sustainable growth as an eco-friendly company by expanding its top-caliber onshore and offshore wind energy business and producing power and hydrogen energy using wind.

According to a Kolon Global official, “the company continued to grow stably by creating inter-business synergy after the merger of construction, trade and automotive sectors in 2012, but decided on the spin-off considering the rapidly changing business environment. The company plans to grow consistently after the spin-off by maximizing efficiency and implementing customized growth strategy, and share the profits with the shareholders.”