The Korean Herald reports that LS Cable, the world's No. 3 cable manufacturing firm, aims to achieve upwards of 1 trillion won in sales of subsea cables in 2015 to top the global market now dominated by three European companies, its chief executive said.
"We are targeting 700 billion won to 1 trillion won in revenue from subsea cable sales in 2015, and will become the global No.1 firm in the market that year," CEO Son Jong-ho in a meeting with reporters at the company's plant in Donghae City, Gangwon Province, last Friday.
In order to achieve the goal, the company earlier this month started production of submarine cables at the 180 billion won ($148.8 million) plant, the first of its kind in Korea, and the fourth in the world.
"A revenue of 700 billion won would give the company about a 35 percent share in the global subsea cable market," Son said.
The global underwater cable market has been for decades dominated by three European firms - Nexans of France, Prysmian of Italy and ABB of Switzerland. The barrier to new entrants is high because advanced technology is required to produce a long length and high-voltage cable for subsea transmissions of power and communications, LS Cable officials said.
"Although less experienced than our competitors, we have cutting-edge technology and facilities," Lee In-ho, director of LS Cable's Donghae Plant, told reporters.
"It would be a matter of time (for us to catch up with our European rivals)," he said.
The global subsea cable market, which amounted to 1.5 trillion won last year, is expected to grow 24 to 25 percent annually, Son said. He expected the increasing renewable energy market to boost demand for power cables linking offshore wind farms with mainland. Demand is also rising for submarine cables, which are used to transmit mass electricity between islands and the mainland, he added.
First subsea cables by local firm
LS plans to complete a 105 kilometer subsea power and communications cable system connecting Jeju Island and Jin Island (Jindo in Korean) by 2011. The company says the $312 million project holds a significant meaning as it is expected to pave the way for the company to enter the high-margin global subsea cable market.
This would be the first time that a local firm would make a subsea cable system in Korea where there is one underwater cable system linking Haenam with Jeju Island.
The project is also LS Cable's first-ever submarine cable project although it was involved in repair work of subsea cables connecting Haenam with Jeju island, which were built by Nexance in 1997.
The plant is located near the East Sea, which makes it easy for a large vessel to access, anchor and carry cables.
LS also moved its plant to manufacture industrial specialty cables from Anyang, Gyeongi Province to next to its subsea cable plant. The factory manufactures industrial specialty cables for ships, trains, power plants and others, started production began in June this year.
Growth via M&A
Son also said the company is targeting the No.1 spot in overall cable sales by 2015 and it is looking to continue to grow via acquisitions.
Son earned the nickname of "a wizard of M&As" after he led a series of M&As involving overseas rivals in a bid to expand its overseas presence; LS Cable acquired U.S.-based Superior Essex for $900 million last year and China-based wire and cable manufacturer Hubei Yongding Honggi Electronics for 109 million yuan ($15.9 million) this year.
Its purchase of Superior Essex, the largest wire and cable manufacturer in North America, made LS Cable the No.3 wire and cable manufacturer in the world.
Son said he is looking at acquisition opportunities in the so-called BRICs - Brazil, Russia, India and China - , but added that the company has no immediate plans to buy a new company, saying it will focus on normalizing its newly-acquired companies.
"We are considering (M&As), but we do not have any detailed plans", he said.
"We are keeping a close eye (on possible M&A targets) to prepare for good times."
© 2009 - The Korea Herald