All the Chief Executive Officers (CEOs) of the South Korean shipbuilding giant Hyundai Heavy Industries (HHI) will forego their salaries as part of cost cutting measures aimed at restructuring the group and returning back to profit .
The measure will include returning of up to 50 percent of directors’ salaries and around 10 percent from department heads, the Korea Times writes citing the company.
This means that the seven CEOs will not receive their salaries and around 300 executives will have their salaries slashed in half, in addition to around 150 managers who will relinquish ten percent from their wages.
It is estimated that the measures will result in up to KRW 25 billion in savings per year.
The belt-tightening measures will be implemented across the group’s six subsidiaries of Hyundai Heavy Industries, Hyundai Mipo Dockyard, Hyundai Samho Heavy Industries, Hyundai Oil Bank, HI Investment & Securities and Hyundai Corporation.
The drastic move is set to remain in place until a small annual operating profit on a consolidated basis is achieved across the board.
This is the latest in a series of cost cutting steps undertaken by HHI which included liquidating of unprofitable overseas subsidiaries, which started in 2014.
HHI reported a net loss of KRW 451.4 billion (USD 398.4) in its earnings report for the third quarter of 2015.
According to the disclosure, 3Q sales came in at KRW 10.9184 trillion and operating loss at KRW 678.4 billion.
On a quarter-on-quarter basis, sales declined 8.7%, while operating loss and net loss widened by KRW 507.4 billion and KRW 209 billion respectively, due to delays in offshore projects and lackluster sales of the construction equipment business, the company said.
Meanwhile, HHI reckons 4Q15 as a critical juncture for earnings turnaround.
World Maritime News Staff