SONGWON Industrial Group reports Financial Results for Q3/2020

Publishing date: 13.11.2020

SONGWON Industrial Group today announced its financial results for the 3rd quarter ending September 30, 2020. In Q3/2020, the Group achieved consolidated sales of 195,237 Mil. KRW, marking a 6.3% decline in revenue compared to sales for Q3/2019 (208,388 Mil. KRW). During Q3/2020, the EBITDA increased by 7.3% to 24,349 Mil. KRW and the Group recorded a net profit increase of 19.8% (8,746 Mil. KRW) over Q3/2019. SONGWON achieved YTD September 2020 consolidated sales of 603,925 Mil. KRW.

In Million KRW Q3
2020 2019 ∆%
Sales   195,237208,388 -6.3%
Gross profit   40,62241,000  -0.9%
Gross profit margin     20.8% 19.7%
Operating profit 15,82214,039  12.7%
EBITDA 24,349    22,694  7.3%
EBITDA margin 12.5% 10.9%
EBIT 15,796    13,53216.7%
EBIT margin 8.1% 6.5%
Profit for the period 8,746  7,302  19.8%

Throughout the 3rd quarter of 2020, SONGWON witnessed ongoing global economic uncertainty due to the continuing COVID-19 pandemic which has subsequently disrupted markets and negatively impacted demand in many industries. Despite this, SONGWON’s Division Performance Chemicals (+8.2% compared to Q3/2019) performed well throughout the quarter, seeing improvements across its businesses and signs of market recovery, notably in Korea which resulted in increased demand. The Division saw higher sales in PVC Additives particularly in South East Asia and South Asia. Furthermore, the high plant utilization rates led to an improved gross profit margin for Tin Intermediates/Catalysts.

For SONGWON’s Division Industrial Chemicals, the challenging market environment in Q3/2020 led to a decline in revenue (-11.3%) compared to Q3/2019. There was a drop in the sale of Polymer Stabilizers mainly caused by lower market demand, which was only partially mitigated by an increase in relative market share combined with the slightly positive effect of foreign exchange rate developments. In addition, an erosion in price was identified in Q3/2020 which was driven by lower raw material costs. For Lubricant Additives, unforecasted higher demand with short lead times led to a strong result in the 3rd quarter of 2020.

During Q3/2020, the Group benefited from the automotive market’s signs of recovery (with some exceptions) but recognizes that a 2nd wave of COVID-19 could lead to another decrease in demand. In the 3rd quarter, SONGWON highlighted its ongoing commitment to sustainability with the release of SONGFLAME® WB 201. The latest solvent-free, aqueous, flame-retardant synergist was especially developed for the CASE (coatings, adhesives, sealants and elastomers) market and textile applications requiring flame-retardancy. Throughout Q3/2020, in order to maintain an optimal cost position, SONGWON set its capacity levels to meet the demand and continued implementing its Business Continuity Plan measures.

Outlook
The Group sees the remainder of the year remaining unpredictable due to the continuing uncertainty surrounding the duration of the pandemic and the challenging market environment it has created. Based on the increasingly heightened concern for a potential supply disruption caused by a 2nd wave of COVID-19 pandemic, SONGWON cautiously expects the increases in demand seen for performance chemicals in Q3/2020 to continue in Q4/2020 and possibly into 2021. Customers’ traditional end-of-year destocking is expected to have a general negative impact. 

In response to current demand unpredictability, SONGWON will continue progressing with additional plant utilization to ensure it can respond to any sudden demand peaks with adequate supply as well as to build safety stocks for its businesses.

Although the full effect of the COVID-19 pandemic and the rate of recovery are uncertain, the Group will be remaining cautious and closely monitoring the global situation and pandemic-related impacts on the industry and various markets. Having confidence in its resilient business model and continuous optimization strategy, SONGWON believes that the company is well-positioned to navigate these challenging times.