2023년 06월 15일
AJ Networks CEO Samdal Son "Group restructuring suspended, all-out focus on improving profitability"
- Spin-off of pallet business unit temporarily suspended until financial markets stabilize
- Record earnings last year after restructuring affiliates
- Establishing a 'virtuous cycle of investment and profit' by focusing on high-yielding businesses in the face of rising interest rates
"Rising interest rates have put upward pressure on costs, but we will use this as an opportunity to focus on high-margin businesses."
In an interview with the Korea Economic Daily on Thursday, Son Sam-dal (pictured), CEO of AJ Networks, said, "Although the division of the pallet business has been temporarily suspended, the group-wide restructuring focused on profitability and growth has been finalized."
Focus on Reintegration and Internalization Toward 'One Company'
Founded in 2000, AJ Networks is the holding company of the AJ Group and a comprehensive rental company specializing in business-to-business (B2B). It operates three business divisions: the holding division, IT solutions, pallet and logistics, and construction equipment.
The IT Solutions division provides IT device rentals such as PCs and tablets, as well as technical support for IT solutions. The Pallet & Logistics segment rents pallets, taping machines, and cleaning vehicles used to move goods at logistics sites to customers. Construction Equipment deals with the latest specialized construction and industrial equipment such as aerial lifts and forklifts.
The proportion of each business segment's sales to total business segment sales is 43% for IT solutions, 40% for pallets, and 17% for construction equipment.
Other subsidiaries include AJ Total (f&b and logistics), AJ Energy (oil distribution ), AJ Maintenance Partners (vehicle & robot management), AJ ICT (IT outsourcing), and AJ Daewon (facilities management).
"Since the demerger of the pallet business division has been temporarily suspended, we have been focusing our energy on reintegration and internalization for 'One Company,'" said Mr. Son. "The demerger of the pallet business unit will be resumed after the financial market stabilizes in one to two years."
AJ Networks had been planning to spin off its pallet business since last year, but temporarily suspended it in March this year, citing financial market instability. The plan was to create an independent entity to further grow the business, but after last year's Legoland debacle, the company decided that it would be difficult for the new entity to secure borrowing.
The pallet business is a core business with an average annual sales growth rate of more than 15% over the past five years. As the logistics market has expanded, more logistics companies are renting pallets on an as-needed basis rather than purchasing them.
AJ Networks reported record consolidated revenue of KRW 1.208 trillion and operating profit of KRW 75.4 billion last year. Year-over-year, revenue increased 23% and operating profit increased 56.9%. The operating margin increased from 1.5% at the end of 2019 to 6.2% last year.
In the medium to long term, the blueprint remains the same, with each business unit becoming independent through spin-offs, while AJ Networks remains a pure holding company.
"For this to happen, each business unit must have the appearance and profitability to stand on its own, and only then can AJ Networks play the role of a think tank as a holding company for a group that operates various rental businesses," Son said.
Targeting the 'future food' of robotics and unmanned industries
Mr. Son cited AJ Networks' rental business model, in which investments and profits circulate, as a growth driver.
"Moving away from the management strategy of outward expansion in the past, we are now focusing on increasing investment efficiency to generate high returns," he said. "Although interest rate hikes are putting pressure on cost increases, we will continue to invest in new assets to build the infrastructure needed for future growth."
AJ Networks invests between 150 billion and 200 billion Won in new assets every year. This year, the company is focusing on investments to further increase its 40 direct logistics bases nationwide and equip its own integrated logistics management system.
It will also invest in the robotics and unmanned industries, which are predicted to be the future. As the era of automation is coming, the company plans to enter the serving robot and industrial robot rental market and take the lead.
"The robotics industry has passed its infancy and entered a growth period, and depending on what strategies we implement, we will either become a player or a powerhouse," said Son. "The various projects we are working on with a dedicated team will show tangible results this year and next year."
The company also sees opportunities overseas. AJ Networks has established subsidiaries in the U.S., Vietnam, and Eastern Europe, and is implementing localization strategies for each country.
"We are focusing on taking our business items, which are the number one rental items in Korea, overseas and localizing them to meet the market demands of each country," said Son. "Our Vietnamese subsidiary has been in the black since last year, and we will expand to construction and logistics equipment in the U.S. and pallets and construction equipment in Eastern Europe."
*Source: Hankyung market insight
2023년 06월 15일
AJ Networks CEO Samdal Son "Group restructuring suspended, all-out focus on improving profitability"
- Spin-off of pallet business unit temporarily suspended until financial markets stabilize
- Record earnings last year after restructuring affiliates
- Establishing a 'virtuous cycle of investment and profit' by focusing on high-yielding businesses in the face of rising interest rates
"Rising interest rates have put upward pressure on costs, but we will use this as an opportunity to focus on high-margin businesses."
In an interview with the Korea Economic Daily on Thursday, Son Sam-dal (pictured), CEO of AJ Networks, said, "Although the division of the pallet business has been temporarily suspended, the group-wide restructuring focused on profitability and growth has been finalized."
Focus on Reintegration and Internalization Toward 'One Company'
Founded in 2000, AJ Networks is the holding company of the AJ Group and a comprehensive rental company specializing in business-to-business (B2B). It operates three business divisions: the holding division, IT solutions, pallet and logistics, and construction equipment.
The IT Solutions division provides IT device rentals such as PCs and tablets, as well as technical support for IT solutions. The Pallet & Logistics segment rents pallets, taping machines, and cleaning vehicles used to move goods at logistics sites to customers. Construction Equipment deals with the latest specialized construction and industrial equipment such as aerial lifts and forklifts.
The proportion of each business segment's sales to total business segment sales is 43% for IT solutions, 40% for pallets, and 17% for construction equipment.
Other subsidiaries include AJ Total (f&b and logistics), AJ Energy (oil distribution ), AJ Maintenance Partners (vehicle & robot management), AJ ICT (IT outsourcing), and AJ Daewon (facilities management).
"Since the demerger of the pallet business division has been temporarily suspended, we have been focusing our energy on reintegration and internalization for 'One Company,'" said Mr. Son. "The demerger of the pallet business unit will be resumed after the financial market stabilizes in one to two years."
AJ Networks had been planning to spin off its pallet business since last year, but temporarily suspended it in March this year, citing financial market instability. The plan was to create an independent entity to further grow the business, but after last year's Legoland debacle, the company decided that it would be difficult for the new entity to secure borrowing.
The pallet business is a core business with an average annual sales growth rate of more than 15% over the past five years. As the logistics market has expanded, more logistics companies are renting pallets on an as-needed basis rather than purchasing them.
AJ Networks reported record consolidated revenue of KRW 1.208 trillion and operating profit of KRW 75.4 billion last year. Year-over-year, revenue increased 23% and operating profit increased 56.9%. The operating margin increased from 1.5% at the end of 2019 to 6.2% last year.
In the medium to long term, the blueprint remains the same, with each business unit becoming independent through spin-offs, while AJ Networks remains a pure holding company.
"For this to happen, each business unit must have the appearance and profitability to stand on its own, and only then can AJ Networks play the role of a think tank as a holding company for a group that operates various rental businesses," Son said.
Targeting the 'future food' of robotics and unmanned industries
Mr. Son cited AJ Networks' rental business model, in which investments and profits circulate, as a growth driver.
"Moving away from the management strategy of outward expansion in the past, we are now focusing on increasing investment efficiency to generate high returns," he said. "Although interest rate hikes are putting pressure on cost increases, we will continue to invest in new assets to build the infrastructure needed for future growth."
AJ Networks invests between 150 billion and 200 billion Won in new assets every year. This year, the company is focusing on investments to further increase its 40 direct logistics bases nationwide and equip its own integrated logistics management system.
It will also invest in the robotics and unmanned industries, which are predicted to be the future. As the era of automation is coming, the company plans to enter the serving robot and industrial robot rental market and take the lead.
"The robotics industry has passed its infancy and entered a growth period, and depending on what strategies we implement, we will either become a player or a powerhouse," said Son. "The various projects we are working on with a dedicated team will show tangible results this year and next year."
The company also sees opportunities overseas. AJ Networks has established subsidiaries in the U.S., Vietnam, and Eastern Europe, and is implementing localization strategies for each country.
"We are focusing on taking our business items, which are the number one rental items in Korea, overseas and localizing them to meet the market demands of each country," said Son. "Our Vietnamese subsidiary has been in the black since last year, and we will expand to construction and logistics equipment in the U.S. and pallets and construction equipment in Eastern Europe."
*Source: Hankyung market insight