South Korean KPF Expects Overseas Subsidiaries Deficit to End Soon
KPF is a maker of fasteners for the construction, heavy machinery and automotive parts industry. In 2012 the company set up multiple overseas subsidiaries to expand business outwards. However, investments on the Spain and Indonesia subsidiaries increased KPF's debt asset ratio and the company ended in business deficit in 2014.
To normalize the business, the company started to clear debts of the Spain and Indonesia subsidiaries, and decided to focus business on the headquarters (South Korea), China, and Vietnam. Five years later till now, the overseas subsidiaries are seeing chance to get rid of deficit. The Vietnam subsidiary in particular reaped an operating profits of 2.2 billion Wons in the first half of 2016, a significant increase from a 1.1 billion Wons deficit of the previous period. The revenues of the first half of 2016 reached 22.5 billion Wons, up 18% from 19 billion Wons of the previous period.
The China subsidiary specialized in automotive parts is reducing deficit as well with a decrease margin of over 60%, and is expected to come out of deficit next year. If this progress continues, KPF's business is likely to turn around within this year and the deficit for the past 5 years is likely to come to an end.
