SONGWON Industrial Group releases Financial Results for Q3/2017

  • Sales in Q3 totaled 180,832 Mil. KRW
  • Net profit amounted to 9,473 Mil. KRW
  • The gross profit margin is at 21.4%

Ulsan, Korea – November 10, 2017
SONGWON Industrial Group (www.songwon.com) today announced its results for the third quarter of 2017. In Q3/2017, gross profit amounted to 38,621 Mil. KRW, and the Group reported sales totaling 180,832 Mil. KRW – an increase of 6.0% over Q3/2016. SONGWON achieved sales of 542,539 Mil. KRW (YTD September 2016: 532,727 Mil. KRW) in the 9 months ended September 30, 2017 and recorded a net profit of 30,036 Mil. KRW (YTD September 2016: 38,150 Mil. KRW).

In Million KRW Q3 YTD September
2017 2016
(restated)
∆% 2017 2016
(restated)
∆%
Sales 180,832170,582 6.0% 542,539 532,727 1.8%
Gross profit 38,621 41,960 -8.0% 120,618 141,133 -14.5%
Gross profit margin 21.4% 24.6% 22.2% 26.5%
Operating profit 14,478 16,046 -9.8% 45,966 66,422 -30.8%
EBITDA
23,133 24,977 -7.4% 70,723 94,434 -25.1%
EBITDA margin 12.8% 14.6% 13.0% 17.7% 
EBIT 15,031 16,288 -7.7% 46,654 68,207 -31.6%
EBIT margin 8.3% 9.5% 8.6% 12.8%
Profit for the period 9,473 10,357 -8.5%
30,036 38,150 -21.3%

In general, SONGWON saw the strong demand continued across all global regions, and in terms of volumes and sales, the Group’s performance continued to remain in line with the market expectations. During Q3/2017, SONGWON noted sales positively impacted by the price increases it had implemented in Q2/2017 for renegotiated contracts and the strengthening of the EUR against the USD and KRW. Overall, in the current market which is considered to be quite balanced, particularly for antioxidants, the Group recorded stable growth in line with its expectations throughout the first nine months of 2017.

In the Americas, although demand is growing noticeably, particularly for polymer stabilizers, demand decreased briefly in the region during Q3/2017 due to Hurricane Harvey. During the 3rd quarter 2017, SONGWON’s manufacturing facilities ran steadily and with high capacity utilization levels, which led to a solid cost position for the Group. However, the global economy remained uncertain throughout Q3/2017, and this combined with the price increases for raw materials negatively impacted the Group’s operating results. Compared to Q2/2017, the implemented price increases were offset by the higher raw material prices leading to a decrease in the EBITDA and EBIT margins in Q3/2017 to 12.8% (Q2/2017: 14.1%) and to 8.3% (Q2/2017: 9.9%).

Looking ahead in terms of sales, SONGWON predicts a strong start to the final quarter of 2017 but also expects to see demand drop due to the customers’ traditional end-of-the-year stock adjustments. The Group plans to implement further price increases in Q4/2017 for contracts which have not yet been renegotiated and expects this to lead to an increase in sales in the financial year 2018. With the extension of its plant dedicated to thermoplastic urethane in Suwon, South Korea, the Group increased its TPU production capacity from 7,000 to 12,000 metric tons per year in Q3/2017. With this and other ongoing developments, the company anticipates the demand for its products to grow steadily at a rate which slightly exceeds the global GDP.

Although challenges exist, SONGWON will continue to adhere to its strategy while exercising financial prudency and remaining attentive of the potential for negative surprises. The Group will also seek opportunities to further support long-term growth while ensuring the stability of SONGWON’s core business. The organization is confident that this approach will yield attractive returns in 2018 and beyond.