Kolon Industries seeks to sell film business

[Image source: Kolon Industries]

Kolon Industries Inc., a chemical and textile manufacturing unit under South Korea’s Kolon Group, is seeking to sell its struggling film business, a move that comes amid weak demand in front industries and intensifying competition with cheap Chinese products.

According to investment banking (IB) sources on Wednesday, Kolon Industries is considering selling its film business and is currently in negotiations with potential buyers, including Hahn & Co., a large local private equity fund (PEF). The sale price is reportedly in the hundreds of billions of won range.

Kolon Industries has been producing a wide range of films from those used in electronics displays to those used for packaging. The company, in particular, has been supplying products such as transparent polyimide (CPI) for foldable phones to the Chinese market after successful mass production for the first time in the world in 2019.

“There is also talk of selling only part of the business, not the entire business,” said an IB industry insider.

Analysts attribute Kolon Industries’ move to the recent downturn and reduced profitability of the local film industry.

Currently, the Korean film industry is facing challenges in the low-end general product category, such as packaging films, due to the low-cost competition from Chinese products. The industry is reorganizing its business to focus on high-value-added products, but demand from home appliance companies, its main customers, is also declining.

Kolon Industries’ film and electronic materials business unit posted an operating loss of 17.7 billion won ($13.51 million) in the third quarter of 2023 and has been in the red since the second quarter of 2022.

However, the loss, which hit 43.1 billion won in the fourth quarter of 2022, declined for three consecutive quarters by adjusting the operating rate.

“We are adjusting our operating rates to overcome the downturn in the film business,” said a Kolon Industries official, adding that “nothing has been decided on the sale at the moment.”

Meanwhile, Choi Jeong-woo, chairman of POSCO Holdings Inc., has been removed from the list of candidates for the next chairman, effectively ending his bid for a third consecutive term.

According to POSCO Holdings, the company’s CEO Candidate Recommendation Committee held its fourth meeting on Wednesday and selected eight internal candidates for reputation checks, which did not include Choi.

Choi was on the list of candidates for the next chairman as he had not mentioned his intention to step down even after the committee was formed in December 2023. He will step down after his term ends in March. It will be five years and eight months since he became chairman in July 2018.

The committee will finalize its long list of internal and external candidates on January 17 by compiling the results of reputation checks on external candidates currently being recruited.

Based on the list, the committee will seek input from a Candidate Recommendation Advisory Panel composed of prominent external figures.