LX Hausys Ltd., a manufacturer of various building materials in South Korea, has decided to withdraw its plan to sell its wallpaper division, as the company still see synergies with other businesses.

The company, which operates the country’s popular wallpaper brand Z:IN Wallcovering, had pushed for the sale of the business and discussed timeframe with a local securities firm, according to investment banking industry sources. The market had projected the wallpaper division to be worth around 200 billion won ($153.29 million).

“LX Hausys promoted the sale of the business unit to improve its financial structure, including its debt ratio, but decided to cancel it in consideration of the synergy effect the business unit creates with the existing construction material business,” an official from LX Hausys said.

LX Hausys is leading the industry in interior materials such as windows, flooring and wallpaper. Its wallpaper division is among the top three in the Korean wallpaper market, along with Shinhan Wallcoverings Co. and Gaenari Wallpaper Co. According to a relevant industry source, three or four companies account for 80 percent of the Korean wallpaper market, and LX Hausys has maintained its No. 1 position with sales of 85 billion won in 2021. Those of Shinhan Wallcoverings and Gaenari Wallpaper during the same period was 72.2 billion won and 71.4 billion won, respectively.

Driven by the downturn in the construction and real estate markets, LX Hausys has been pushing to restructure its non-core businesses to improve its financials and focus on the construction materials business. Since the pandemic, the domestic interior remodeling market has grown rapidly as people want to revamp home decoration before moving in, but related demand has plunged with the sluggish real estate market.

In fact, LX Hausys said in its preliminary earnings announcement that it recorded a net loss of 117.7 billion won on sales of 3.61 trillion won last year due to rising raw material prices, fluctuations in the won/dollar exchange rate and higher logistics costs. The company’s debt ratio reached 212.3 percent at the end of the third quarter last year, the highest in the past five years.

Earlier in 2021, LX Hausys also pushed to sell its automotive materials and industrial film divisions due to losses.

By Cho Yun-hee, Kang Doo-soon, and Yoon Yeon-hae

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]