Humasis, an in vitro diagnosis kit maker, saw its sales drop sharply in the third quarter.
According to industry watchers on Wednesday, the conflict between the company and its minority shareholders has also expanded to a management dispute, deepening worries about corporate competitiveness.
Humasis unveiled its third-quarter performance in a public notice Monday. According to the report, the company’s consolidated sales in the July-September period totaled 24.3 billion won ($18.3 million), down 76.06 percent from 101.4 billion a year earlier.
The company also registered an operating loss of 9 billion won in the third quarter, a sharp turnaround from the operating profit of 69.8 billion won a year ago. Its net profit also plummeted 83.66 percent, from 56.3 billion won to 9.2 billion won.
On a cumulative basis, Humasis recorded 465.5 billion won in sales and 263.9 billion in operating profit, up considerably from 2021. The brisk performance in the first nine months was attributable to the steep sales growth of diagnosis kits at home and abroad amid the Covid-19 pandemic in the first half-year.
The grim report card in the third-quarter ascribed it to the declining sales of Covid-19 diagnosis kits as the pandemic weakened to an endemic.
“As the government’s Covid-19 policy shifted from a pandemic to an endemic system, the demand for diagnosis kits sharply dropped, pulling down our sales of diagnosis kits and adversely affecting the overall performance,” a company official said.
The official added that although economic outlooks seem uncertain due to the endemic situation, interest rate hikes, and the Russian war in Ukraine, the company could find a new growth engine by diversifying business lines and other measures.
However, sales decline is not the only issue for Humasis.
That's because conflicts are escalating between Humasis CEO Cha Jeong-hak’s family and minority shareholders over the company’s management control.
Notably, Koo Hee-cheol, a minority shareholder, and four others secured 1,866,853 Hamasis shares, or an equity stake of 5.45 percent, in October and applied for holding an extraordinary shareholders’ meeting to the Anyang Branch of Suwon District Court on Nov. 3.
“As a shareholder of Humasis, we will exert influence on the company management with other shareholders having similar opinions,” Koo and four others said when they took over the equity stake. “To stabilize company management, we will elect new executives with expertise and revise the company rules.”
Minority shareholders currently hold about 80 percent of equity takes, and the equity stake friendly to CEO Cha, including people with a special relationship with him, is less than 8 percent. Humasis management plans to cope with minority shareholders’ application for an extraordinary shareholders’ meeting according to legal procedures.
As the situation aggravated, some within the company expressed concerns about corporate competitiveness.
“We are in conflicts with some shareholders who want a short-term upward momentum for share prices,” another company official said. “At a time when it is difficult to conduct normal business, including the swelling stockpiles of Covid-19 diagnosis kits, the continuous difficulties in and outside the company might affect even the fourth-quarter performance.”