SEOUL (Reuters) – South Korea’s Lotte Group, whose chairman was released from jail this month, has reset a five-year investment plan just two years after its initial announcement, saying it now aims to spend 50 trillion won ($44.05 billion) through 2023.
FILE PHOTO: A flag bearing the logo of Lotte Hotel flutters at a Lotte Hotel in Seoul, South Korea, March 25, 2016. REUTERS/Kim Hong-Ji/File Photo
The group had previously pledged $35.20 billion through 2021 after Chairman Shin Dong-bin apologized for a corruption probe involving his family. However in the intervening years, the chairman’s own legal battles – in which he was jailed in February for bribery and breach of trust – stalled that plan.
“Since we set out our previous investment plan, we’ve been eight months without a chairman,” said a Lotte Corp official, who was not authorized to speak with media and so declined to be identified. “Our revised plan is to tell shareholders and the public that we are resetting our goal and making a fresh start.”
The plan follows other long-term spending pledges from Samsung Group and Hyundai Motor Group, made after the liberal government assumed office in May last year calling on major firms to invest more in the local economy and create jobs.
“Lotte’s investment plan is typical of a Korean family-run conglomerate,” said Park Ju-gun, head of research firm CEO Score. “When a family member emerges from a scandal, the firm announces an investment plan as a sort of gesture.”
Samsung similarly announced a major investment plan in the months after the release from jail of heir Jay Y. Lee, who had also been convicted of bribery.
“It’s also a tradition to announce big investment plans usually within months of a new government, to respond to the administration’s call for support in strengthening the economy,” Park said.
The new plan includes about 12 trillion won to be spent in 2019, mainly to expand chemical plants in South Korea, Indonesia and the United States. The amount represents the group’s largest investment for a single year, exceeding the 11.2 trillion won spent on the purchase of a petrochemical firm in 2016.
“The plan reflects our will to quickly normalize management activities that recently slowed, secure competitiveness for future growth and to contribute to revitalizing the national economy,” holding company Lotte Corp (004990.KS) said in a statement on Tuesday.
The company declined to elaborate how much money had been spent so far under the initial five-year investment plan.
In its retail business, which includes shopping malls and supermarkets, Lotte said it would improve online services using big data and artificial intelligence, and build more malls. It also said it would hire 70,000 people over the next five years.
In China, Lotte’s retail business has been struggling since the Chinese government objected to a U.S. missile defense system being deployed in South Korea on land provided by Lotte, in a row that sparked anti-Korean sentiment in the country.
Lotte Corp shares ended down 3.4 percent on Tuesday versus a 2.6 percent fall in the benchmark share price index .KS11.
Reporting by Ju-min Park; Editing by Christopher Cushing