SONGWON Industrial Group announces positive Q1 2013 financial results

Publishing date: 23.05.2013

SONGWON Industrial Group (www.songwon.com), is pleased to announce its Q1 financial results for 2013. The detailed Q1 2013 financial results report, which is compliant with Korean International Financial Reporting Standards (“K-IFRS”), can be downloaded on: www.songwon.com/en/investors/financialresults.

• Strong financial Q1 2013 results for the SONGWON business; sales remain stable despite challenging economic environment
• Profit for the period increases six fold versus Q1 2012 to 7,722 Mil. KRW
• Two new entities for the OPS business legally established in the Middle East

SONGWON’s gross profit versus the same quarter of 2012 increased by 10.5% to 33,088 Mil. KRW on 174,344 Mil. KRW of sales. EBIT increased significantly to 18,622 Mil. KRW with the EBIT margin jumping 7.6% points up to 10.7%. Overall profit for the period increased noticeably by more than 600% to 7,722 Mil. KRW.

Hans-Peter Wüest, Chief Financial Officer and Member of the SONGWON Industrial Group Executive Committee, stated: “We are very pleased to once again announce positive results for the first quarter of this year with a sharp increase in profits of 7,722 Mil. KRW versus 1,093 Mil. KRW for the same period in 2012. Sales of Polymer Stabilizers remain the backbone of the results for this quarter and most regions have shown a slight increase in volumes.

The sales result reflects the pressure that has been put on price and a continuing trend of increasing raw material and energy costs. However, the measures we have put in place to control cost and the implementation of technology that alleviates our reliance on third party suppliers, thanks to our continued investment in backward integration, has contributed to the healthy financial picture that we can present.”

Jongho Park, Chairman and CEO and Head of the SONGWON Industrial Group Executive Committee, added: “SONGWON continues to grow while delivering a wide range of Polymer Stabilizers that meet customers’ needs and we continue to be the partner of choice on a global scale. We have realigned our structure to deliver the results we have planned for, and we are achieving now. Contributors to our profit increase have been the newcomers to our product portfolio. One Pack Systems (OPS) have grown in strength and popularity and can soon also be supplied from a new facility in Houston, USA. Our cooperation with Sabo to produce HALS (Hindered Amine Light Stabilizers) is also meeting our expectations and sales continue to increase according to plan. In the Middle East, after selling 40% of the capital of SONGWON Additive Technologies AG to new business partners Polysys Industries LLC and Pan Gulf Holding Company W.L.L., two new entities have been legally established during the first quarter of 2013: one in Dubai, SONGWON Additive Technologies – Middle East FZE, being the sales company for the Middle East region in which SONGWON Group holds a 60% stake. In Abu Dhabi, Polysys Additive Technologies - Middle East LLC – a partnership with Polysys Industries LLC - was also legally established and will be responsible for the next OPS production facility based in Abu Dhabi, set to come on stream in 2014 with an initial capacity of 7.000 metric tons. Our strategic plan is set to deliver growth globally and to bring a stream of new products to the market designed to meet the needs of our customers and we look forward to making more announcements in the future.”

Outlook
Jongho Park continued: “These Q1 results indicate that SONGWON is on track to achieve its business plan for 2013. Slow but steady recovery in the USA and China economies and moderate growth in the emerging markets will support slight growth in Q2 and Q3 2013. The trend over the last two years has been solid mid-year results followed by softening in the 4th quarter, followed again by rebounds. Demand for Polymer Stabilizers in the USA and Middle East is on the increase, driven by shale gas and lower raw material costs which have stimulated growth in the Polyolefin Segment. SONGWON will continue to strengthen its OPS position globally through its manufacturing facilities in Europe, USA and the Middle East. The expansion of our DOTO (Dioctyl Tin Oxide) plant will come on stream mid year as planned resulting in increased sales of Tin Intermediates in the second half of 2013. To optimize execution and enhance customer focus we have announced the formation of a Supply Chain Organization including Customer Service, SOIP (Sales Operations and Inventory Planning), Sourcing, Logistics and OPS. Integrating these functions will facilitate optimal planning and execution from raw materials to satisfied customers. We are adding resources throughout the business to support our growth. Growth and customer satisfaction require infrastructure and SONGWON is making the investment in an organization capable of delivering on our promise of being “Salient in Additives”!”