Hyundai auto group denies talks with Siemens on selling stake in railway business

By Lim Chang-won Posted : April 21, 2021, 17:15 Updated : April 21, 2021, 17:15

[Courtesy of Hyundai Rotem]

SEOUL -- South Korea's Hyundai auto group rebutted a domestic news report on talks with Siemens AG, an industrial manufacturing company in Germany, on selling the loss-making railway section of its subsidiary, Hyundai Rotem, to focus on future cars and mobility business. The report triggered a sharp fluctuation in Hyundai Rotem's share prices.

"Contrary to what was reported, our company is not seeking to sell its stake in Hyundai Rotem," Hyundai Motor's finance management head Park Hae-sung said in a regulatory filing on April 21. Hyundai Motor is the largest shareholder with a 33.8 percent stake in Hyundai Rotem.

Hyundai Rotem also published a similar post denying any stake sale, after its labor union issued a statement urging the auto group to take action against groundless rumors. "Hyundai Rotem, the only company in South Korea that produces both railway vehicles and defense products, is a key national industry that can never be sold," the union said, insisting a stake sale should be approved by all employees.

Hyundai Rotem's business is divided into three key sections -- railway, defense and plants. Mainly due to heated competition abroad, the railway section has been in the red, posting an operating loss of 41.7 billion won ($37 million) in 2018, 259.5 billion won in 2019 and 11.6 billion in 2020. New orders have decreased from 3.8 trillion won in 2017 to 2.8 trillion won in 2020.

At a meeting of shareholders in March, Hyundai Rotem CEO Lee Yong-base promised to focus on new growth engines such as hydrogen, robots and self-driving. "We will establish a foundation for future growth by expanding investments in core and future businesses," Lee said. Hyundai Rotem is involved in the development of locomotives based on liquefied hydrogen and hydrogen trams.

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