After posting better-than-expected business output last year despite the COVID-19 pandemic, Kumho Petrochemical is now bracing for another leap forward, seeking to gain an upper hand in the post-coronavirus industry, officials said Monday.

The company’s core direction is to grow beyond the conventional petrochemical sector, to expand high value-added products, and to diversify the market use of newly growing materials.

Last year, the company posted 740 billion won ($651.4 million) in operating profit, more than double from a year earlier.

It also saw its credit score rise steady over past years by reducing the debt ratio and adjusting its financial structure. The debt-to-equity ratio, which had peaked in 2009 at 660 percent, dropped to 73 percent in 2019 and has remained under 100 percent since. The credit rating also jumped from BBB- to A0 during the same period and continued to go up a notch every year afterwards.

The business portfolio diversification also picked up momentum during the recent decade.

The proportion of high value-added products soared from 20 percent in 2012 to over 50 percent last year. An example is acrylonitrile butadiene latex, or NB latex, a synthetic latex used mostly for medical and laboratory gloves.

The material saw export volume reach $150 million in December, up 34 percent from the previous month and up 150 percent from a year earlier.

Creating synergy with the increased medical demands was the company’s increased manufacturing capacity, officials explained.

Kumho Petrochemical expanded its production capacity by 60,000 tons per year in 2020, bringing the total to 630,000 tons per year. Its target for this year is to push the total to 700,000 by year-end.

Also, the company introduced a two-way product classification system and applied differentiated strategies.

For its “core” businesses -- representative bestselling items including NB latex -- the company will focus on maximizing market share and profits until 2025. As for the “base” businesses -- new growing sectors such as synthetic resins -- the key target will be to diversify the use of materials in order to meet the fast-changing market demands.

Besides such a two-track business strategy approach, the petrochemical firm will also seek for merger and acquisition opportunities in the global market, especially in sectors that may create synergy with its up-and-coming carbon nanotube, eco-friendly insulator and engineering plastic businesses, officials added.

Kumho Petrochemical’s ambitious business readjustments come in the wake of a management dispute between CEO Park Chan-koo and Senior Vice President Park Chul-wan.

The senior vice president had held a press conference last week to challenge the corporate leadership of his uncle, who is also chairman of Kumho Petrochemical Group, claiming that his uncle should be stopped from acquiring a debt-riddled resort company.

But the junior Park apparently is seen to lose ground as major proxy adviser Institutional Shareholder Services recently agreed with the appointment of new directors recommended by the company, or de facto by incumbent Chairman Park. As for the demands made by Chul-wan, the ISS rejected them all, saying they were “too aggressive.”

As foreign investors account for a combined 30 percent stake in the company, the ISS recommendation is expected to yield tangible influence on the shareholders’ decision at the proxy meeting slated for March 26.

“It is meaningful that ISS agreed 100 percent with the company’s suggestion,” said an official of the company.

“We shall work further so that other local and global proxy advisers may recognize the rationality and sincerity of our corporate road map.”

By Bae Hyun-jung (tellme@heraldcorp.com)