SONGWON reports robust Q3 2021 results

Publishing date: 12.11.2021

SONGWON Industrial Group today released its financial results for the 3rd quarter of 2021. During Q3/2021, the Group achieved consolidated sales of 260,137 Million KRW marking a 33.2% rise in revenue over sales recorded in the same quarter of the previous year (195,237 Million KRW). The Group reported a net profit of 20,972 Million KRW for the 3rd quarter which was more than double the result achieved in Q3/2020 (8,746 Million KRW).

Year-to-date (YTD), the Group realized consolidated sales of 714,715 Million KRW, representing an 18.3% rise over YTD September 2020 (603,925 Million KRW), and recorded a net profit of 45,109 Million KRW, delivering a 77.9% increase over the same reporting period in the previous year (YTD September 2020: 25,350 Million KRW). In addition, the Group achieved a gross profit margin of 26.3% in Q3/2021 and YTD 23.6% reflecting an increase of 5.5%-points and 3.1%-points, respectively, over the comparable period of the prior year.

In Million KRW Q3
2021 2020 ∆%
Gross profit68,50740,62268.6%
Gross profit margin26.3%20.8%
Operating profit30,05015,82289.9%
EBITDA margin15.0% 12.5%
EBIT margin11.7% 8.1%
Profit for the period20,9728,746139.8%

In accordance with expectations, Division Industrial Chemicals performed strongly during Q3/2021. Volumes were in line with Q2/2021 and consolidated sales amounted to 193,345 Million KRW, 33.1% up over the same quarter in 2020 (Q3/2020: 145,300 Million KRW). The higher sales and volumes recorded, particularly in SONGWON’s key Polymer Stabilizers business, were mainly driven by the continuing high global demand, especially in the EU and Americas, as well as growth from new customers. Although facing availability challenges surrounding certain raw materials throughout the 3rd quarter, SONGWON was able to avoid any major supply disruptions to customers with its increased stocks and multiple sourcing strategy in place. SONGWON’s formula driven price increase for Fuel and Lubricant Additives in Q3/2021 led to higher revenues and the business benefitted from demand recovery following the Force Majeures in Q2/2021. Throughout Q3/2021, the overall positive trend in the coatings industry continued and SONGWON’s Coatings business saw positive growth with some market contraction in Asia, mainly in China.

Despite the current high material and logistic costs combined with intense price competition in some of its markets, Division Performance Chemicals also delivered a robust 3rd quarter 2021 with an increase in revenue of 33.8% (Q3/2021: 66,792 Million KRW) compared to Q3/2020 (49,937 Million KRW). With plants running at full capacities, both Tin Intermediates and PVC performed well, generating significantly higher sales than in the 3rd quarter of 2020. Restrictions related to COVID-19 affecting customers in some markets as well as fierce price competition created challenges for Solution Polyurethanes and Thermoplastic Polyurethanes which observed a decline in demand.

In view of the continuing positive momentum seen in Q2/2021 and Q3/2021, SONGWON looks optimistically towards the last 3 months of the year and anticipates stable order volumes until the end of 2021. Nevertheless, SONGWON will remain vigilant and well-prepared to respond quickly as it expects both supply and logistics challenges to be ongoing. Furthermore, the Group sees the market continuing to be concerned about the availability and costs of raw materials and expects pricing to remain volatile. SONGWON will respond by implementing the necessary measures to avoid any negative impacts to supply as well as increasing its capacities to ensure that it can meet the upsurge in demand. In addition to this, SONGWON intends to progress with optimizing its organizational efficiency to overcome the current market headwinds and focusing on the Group’s long-term strategic priorities.