SONGWON Industrial Group announces Q1/2019 Financial Results

*Refer to note 2.2 of Q1/2019 Financial Statements

After achieving very good overall results in 2018, SONGWON experienced an unexpectedly slow start in 2019. The slowdown in the global economy perceived in Q4/2018 continued into the first months of 2019. SONGWON Industrial Group recorded revenue in the first three months at the same level as achieved in the previous year, while demand across the industry continued to show volatility. Particularly in the automotive as well as building and construction industry, end consumer demand was down.

In addition, the challenging start to the year also reflected the suboptimal market conditions for chemical industry as a whole. The ongoing US/China trade war and global concern relating to other socio-political areas are clearly having an impact on worldwide demand in general. Higher costs driven by lower capacity utilization in the final quarter of 2018, as well as the higher material costs continued into Q1/2019 which also contributed to a decline in SONGWON’s gross profit.

In course of January, the Group was able to achieve fairly reasonable overall performance. However, in February, the Chinese New Year celebrations throughout the month and the traditional closing of businesses in North East Asia for the holiday, impacted results and led to a short-term weakening in performance. However, SONGWON saw performance increase in March due to the positive effect of the USD currency impact combined with the positive effects of the price increases implemented throughout 2018. Amid the challenges in the first months of the year, SONGWON Industrial Group also identified many underlying positive trends.

SONGWON notes that after the traditional annual period when customers maintain low levels of inventory, Q2 and Q3 are historically strong quarters and usually bring increased demand. Therefore, looking forward, SONGWON anticipates seeing renewed momentum and a gradual increase in the general demand for its products. Remaining committed to its aim of improving profitability, the company will continue to draw upon its key strengths, penetrate markets and capitalize on growth opportunities while exercising the appropriate levels of prudency.

Looking ahead to the next quarters of 2019, the company remains committed to leveraging its leading position and technology strength to accelerate innovation initiatives across SONGWON’s core businesses and also to enhancing the Group’s overall competitiveness.