GS Group, the nation’s eighth-largest conglomerate by assets, is expected to further tap the power business beyond its three core businesses of oil refinery, construction and retail.

This shift was reflected by the launch of GS E&R, a new affiliate focusing on the power business, last week.

GS E&R is the new corporate name of STX Energy, which GS Group took over last December with LG International from Japan’s Orix Corp. for about 600 billion won ($564 million).

GS Group aggressively sought the deal, hoping that it would help pull the company out of its continued business slump. The group has sought a new growth engine for years amid falling profits, particularly in its oil refinery and construction businesses.

The group’s operating profit in 2013 plunged 20 percent on-year to 552.1 billion won, mainly due to the continued business woes of GS Caltex, its flagship subsidiary.

The group heavily depends on GS Caltex. With the nation’s second-largest oil refinery, GS Caltex was responsible for about 66 percent of GS Group’s total revenue in 2013. 

In a bid to boost business performance, GS Group chairman Huh Chang-soo has honed in on investments in the power sector to diversify the group’s business portfolio.

After acquiring STX Energy, the GS-led consortium took over two local thermal power plants and several oil and gas exploration and production projects in countries including U.S. and Canada.

“We will make all-out efforts to maximize capacity and capability in the power business by bringing GS E&R into the group,’’ GS Group said in a press release.

The name GS E&R reflects the business direction GS Group aims to take in the power sector. According to the group statement, “E” stands for “electricity, energy and environment,” while “R” comes from “resources and renewables.”

Market watchers forecast that Ha Young-bong, the new CEO of GS E&R, will seek to foster win-win partnerships with other affiliates to drive the power business.

Power business-related affiliates include GS Engineering and Construction, GS Power and GS EPS.

“For the overseas power plant construction business, GS E&R can form a partnership with GS Engineering and Construction,’’ a stock analyst said.

In the renewable energy sector, the company will be able to develop a joint project with GS EPS, which has raised capability in the biomass power plant business. GS EPS is building a 100-megawatt biomass power plant, Asia’s largest biofueled power plant, in Dangjin, South Chungcheong Province, sources said.

By Seo Jee-yeon (jyseo@heraldcorp.com)