Shown above is the new SK Magic CEO Kim Wan-seong. He is tasked with the job of improving the deteriorating profitability of the firm. Photo courtesy of SK Network, Graphic by Stan Jung

Malaysian unit struggles to become profitable

South Korea’s SK Magic, a home appliance rental business operator, changed its leadership late last month after suffering a three-year growth slump.

In a board meeting on June 30, the Seoul-based company appointed Kim Wan-seong as its new CEO to replace outgoing chief Yoon Yo-seop, who headed the firm for the past two and a half years.

Getting aboard SK Group in 2001 after studying business administration at Seoul National University, the 49-year-old Kim worked at other SK affiliates, including SK Inc. and SK Materials.

Along with Kim, SK Magic named two new executives to take charge of its business strategy and business support.

The executive reshuffle grabs attention because former CEO Yoon left the company about six months before his term expires. He took the realm at SK Magic in 2021 and was reappointed in late 2022 to lead the firm by the end of 2023.

Observers point out that erstwhile CEO Yoon’s premature departure may be related to the stagnant top line and declining bottom line of SK Magic under his stewardship.

The firm’s sales remained almost flat over the past three years, from 1.02 trillion won ($780 million) in 2020 to 1.05 trillion won ($810 million) in 2021 and the same amount last year.

Its operating profit decreased from 81.6 billion won ($63 million) in 2020 to 71.2 billion won ($55 million) in 2021 and 63.4 billion won ($49 million) last year.

As a result, the entity’s operating profit ratio headed south from more than 8 percent in 2020 to 6.6 percent in 2021 and less than 6 percent last year.

Things were not so good this year, too, as SK Magic logged 274.8 billion won ($211 million) in sales, up 4.4 percent from a year ago, for an operating income of 11.3 billion won ($8.7 million), down 45.7 percent year-on-year.

SK Magic remains unprofitable in Malaysia

After SK Magic came to town through M&A in 2016, the firm chalked up fast growth in sales and profits, prompting it to prepare for the initial public offerings beginning in 2018.

But stiff competition in the domestic market slammed a brake on the growth rate of SK Magic, which urged the firm to scrap the IPO plan in the near term.

In order to find a new revenue source, SK Magic turned its eyes to global markets, especially such Southeast Asian countries as Malaysia and Vietnam.

The outfit launched the home appliance rental business in Malaysia in 2019, but the subsidiary is still operating at a loss.

SK Magic has also failed to make its presence felt in the Vietnamese market.

In other words, watchers point out that the overseas businesses may have contributed to the executive reshuffle, which took place in Korea late last month.