SONGWON Industrial Group announces stable gross profit development for first half of 2013

Publishing date: 22.08.2013

SONGWON Industrial Group (www.songwon.com), is pleased to announce its Q2 and first half year financial results for 2013. The detailed Q2 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.

• Sales and gross profit margin remain stable despite challenging market conditions
• Gross profit for the first half year increases 2.4% to 65,570 Mil. KRW compared to the same period in 2012. The adjusted gross profit encompassing capacity variances is significantly higher than in prior half year (+9.5%)
• Net profit for the first half of 2013 at 8,240 Mil. KRW reflects the solid gross profit performance offset by a range of factors, including increased investments in the expansion of the Group and in performance improvement measures leading to higher SG&A expenses, unfavorable FX impacts as well as higher tax expenses due to expected increasing profits in Korea.

SONGWON is pleased to announce solid operational performance for Q2 2013 and the first half year of 2013. Though there has been a slight softening of revenues, down by 1.8% in the first half of 2013 compared to 2012, gross profit increased by 2.4% from 64,041 Mil. KRW to 65,570 Mil. KRW. The current global demand for SONGWON products remains stable despite the uncertain global economy and financial conditions. SONGWON is on track to deliver on its plan for both volumes and revenues with strong order bookings for the coming quarter.

Hans-Peter Wüest, Chief Financial Officer and Member of the SONGWON Industrial Group Executive Committee, stated: “Sales during the past six quarters have been relatively steady with the exception of the downturn in Q4 2012. Overall 2013 sales are running in line with our plan, despite the softening in Asia and tough competition in Europe and gross profit remains stable. Net profit for the first half at 8,240 Mil. KRW has been impacted by a range of factors as we are further investing in the expansion of the Group and in performance improvement measures leading to higher SG&A expenses. However our underlying trading performance is in line with plan and very satisfactory. Our solid balance sheet and financial strength have enabled us to sign a syndicated loan agreement worth KRW 220 billion which will ensure we have the resources available to meet our growth plans.”

Jongho Park, Chairman, CEO and Head of the SONGWON Industrial Group Executive Committee, said: “The current global demand for SONGWON products remains stable despite the uncertain global economy and financial conditions. Despite that background, we have seen some increase in gross margin in the first six months of this year and we will continue to follow our strategic plan and deliver results accordingly. Our order book for Q3 2013 is strong which will allow us to meet our plan on volume and revenue. Upstream polymer production continues to be stable which drives our volume Antioxidant business. The new OPS production site in Houston, USA, is now up and running, first orders have been shipped and initial contracts committed. In the Greiz OPS facility in Germany, hot extrusion has been added and the technology opens up a new era of optimization for production planning and scheduling. The result of the new extruders will be an extended product range, increased output and better quality for specific product categories. Our sales of Light Stabilizers continues to grow as a result of the focus and momentum created with the SABO collaboration.

The focus on the UV market has also driven growth in our UV Absorber business. Our Thioester business continues with strong regional programs to drive and support solid growth. Productivity initiatives in Ulsan and Maeam, Korea slated for implementation in the second half of 2013 should result in cost relief late this year and in 2014. With the successful completion of the DOTO expansion, Tin Intermediate sales will improve in the second half of 2013. PVC should continue steadily and our team is focused on growing the mixed metal stabilizer position in Korea which will lead to growth in the second half and continued growth in the years to come. Our SAP business will improve in the second half as conditions improve in Venezuela along with our Urethanes, Polyester Diols, and Plasticizers business which will mirror the first half. Overall we are on course to achieve our plans for 2013. Our focus on investment in people and processes to increase customer satisfaction and generate growth is clearly bearing fruit and we are well-placed to benefit from any upturn in 2014.”