With Kim Ji-chan, CEO of LIG Nex1, a defense company nearing the expiration of his term next month, he is attracting attention whether he will be able to succeed in re-employment thanks to strong earnings during his tenure.
CEO Kim Ji-chan, who was elected as the CEO in early 2018, expires on March 28, but it is known that no decision has been made on whether or not to reappoint a successor.
First of all, CEO Kim is evaluated as having a solid performance during his tenure.
According to the Electronic Disclosure System of the Financial Supervisory Service, LIG Nex1, which is regarded as a defense company’Big 2’along with Hanwha, recorded KRW 1.6 trillion in sales and KRW 63.7 billion in operating profit last year.
Compared to the previous year, sales increased 10.2% and operating profit increased 251.9%.
The increase in sales of LIG Nex1 is significant because it has been five years since 2015. LIG Nex1’s sales decreased every year until 2019 after reaching 1.9 trillion won in 2015 due to the sluggish defense market.
In the Kim’s system, sales did not reach the previous year’s level, but the order backlog was record-high, laying the groundwork for future earnings growth. In fact, the securities market predicts that LIG Nex1 will record KRW 1.82 trillion in sales and KRW 75 billion in operating profit this year.
Operating profit also reached 4.3 billion won in 2017, before Kim took office, but is recovering to the previous year’s level to 60 billion won last year. In 2018 and 2019, operating profit increased to 24.1 billion won and 18.1 billion won, respectively, compared to before taking office.
LIG Nex1 produced operating profits of 30 to 70 billion won every year before being listed in October 2015.
The operating margin, which fell sharply to 0.2% before Kim took office, also improved to 1.6% in 2018 and 4% last year.
LIG Nex1’s operating profit plunged compared to the previous year due to a one-off factor due to the notification of the payment of 66.6 billion won of late compensation (a kind of fine for not meeting the delivery deadline in the national contract) in 2017.
In a situation where sales declined due to the market slump and operating profit fell sharply due to a one-off factor, CEO Kim, who was appointed as CEO, pursued a strategy to increase the number of shares focused on sound management and technology during his tenure.
It supplied mass-produced sonar systems and training aircraft, and developed a long-range surface-to-air guided weapon system. It also won an order for the mass production of the next generation military radio (TMMR) worth 1.2 trillion won to support the future combat system of the Korean military.
Last year, LIG Nex1 was officially recognized by the U.S. Department of Defense for the performance of the guided rocket’Vigong’ developed in conjunction with the Defense Science Research Institute.
Since last year, it has established a dedicated development team and business team in the drone field, and is spurring the development of technology in the field of drones and unmanned aerial vehicles, which are considered as the future industry.
In May of last year, LIG Nex1 was in charge of the demonstration project of “building a drone defense system,” which detects and disables unidentified drones to protect major national facilities from terrorism.
With the expansion of orders based on technology, the order backlog of LIG Nex1 increased from 3,7674 trillion won in 2017 to 579 trillion won at the end of September last year. Defense industry orders are concentrated in the fourth quarter, and stock prices predict that the order backlog will reach 7.2 trillion to 8 trillion won as of the end of last year.
It is known that CEO Kim refrained from receiving low-priced orders as much as possible for the purpose of sound management.
In order to secure new growth engines, in November of last year, InnoWireless, a domestic company related to 5G mobile communication, was incorporated as a subsidiary.
Representative Kim selected nine markets in emerging economies that are rapidly increasing defense spending, such as the UAE, Saudi Arabia, India, Vietnam, and Brazil, and began targeting overseas markets with differentiated strategies such as local production that advanced countries do not provide.
In 2019, LIG Nex1 also signed a memorandum of understanding with India’s Adani Group on local production and marketing of Biho Complex.
CEO Kim, who achieved solid performance during his tenure in office, will end his term on March 28th.
An official from LIG Nex1 said, “CEO Kim has been carrying out management activities for the past three years with a focus on securing own technology, winning orders, and substantial management.”
Some view that the CEO’s tenure in office is long due to the nature of a defense industry, so that CEO Kim will be reappointed. Representative Kim is a person from the inside, showing leadership in terms of organizational management within the company, and is said to receive good reviews from members.
Born in 1959 and 63 years old, CEO Kim joined Kumsung Precision, the mother of LIG Nex1 in 1987, and was appointed as the CEO with the promotion of the president in March 2018 after working as the head of the air defense business division, the head of the business development division, and the business manager.
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