SONGWON Industrial Group releases Financial Results for Q2/2017
Publishing date: 15.08.2017
Sales in Q2 totaled 186,742 Mil. KRW
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Net profit amounted to 12,279 Mil. KRW
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The gross profit margin is at 23.6%
Ulsan, Korea – August 15, 2017
Today, SONGWON Industrial Group (www.songwon.com) released its financial results for the second quarter of 2017. The Group reported consolidated sales of 186,742 Mil. KRW and a net profit margin of 6.6% for Q2 - a decrease of 2.1% compared to Q2/2016. For the first half of the year, the Group realized consolidated sales of 361,707 Mil. KRW which is a -0.1% decrease compared to the first six months of 2016 (362,145 Mil. KRW).
| In Million KRW | Q2 | YTD June | ||||
|---|---|---|---|---|---|---|
| 2017 | 2016 (restated*) |
∆% | 2017 | 2016 (restated*) |
∆% | |
| Sales | 186,742 | 179,071 | 4.3% | 361,707 | 362,145 | -0.1% |
| Gross profit | 44,135 | 47,988 | -8.0% | 81,997 | 99,173 | -17.3% |
| Gross profit margin | 23.6% | 26.8% | 22.7% | 27.4% | ||
| Operating profit | 18,505 | 23,785 | -22.2% | 31,488 | 50,376 | -37.5% |
| EBITDA* |
26,365 | 33,792 | -22.0% | 47,590 | 69,458 | -31.5% |
| EBITDA margin* | 14.1% | 18.9% | 13.2% | 19.2% | ||
| EBIT* | 18,521 | 25,036 | -26.0% | 31,623 | 51,918 | -39.1% |
| EBIT margin* | 9.9% | 14.0% | 8.7% | 14.3% | ||
| Profit for the period | 12,279 | 15,592 | -21.2% |
20,563 | 27,793 | -26.0% |
SONGWON’s business delivered according to expectations during the first half year 2017, and in terms of volumes the Group saw double digit growth in some product lines compared to Q2/2016. Although Q1/2017 revenues declined, as a result of the price concessions implemented in response to increased price competition pressure in the second half of 2016, SONGWON managed to reverse the trend in Q2/2017 by successfully implementing price increases where contracts allowed. Overall, the first half year 2017 showed stable growth in line with the Group’s expectations in a market perceived by the organization to be quite balanced particularly for antioxidants.
As a result of both sustained market demand and a generally balanced supply situation, SONGWON continued to see strong demand across all the global regions. The Group also reports that the demand in polymer stabilizers, particularly in the Americas is increasing notably as a result of the polyolefin capacities that are now coming onstream. However, with the global economy remaining uncertain, currency developments were difficult to predict which had a negative impact on the Group’s financial results throughout Q2/2017.
Throughout Q2/2017, all of SONGWON’s manufacturing facilities ran steadily at high capacity utilization levels without disruption which ensured an optimal cost position for the Group. Compared to the previous quarter, the positive trends already described regarding the implemented price increases, as well as the high capacity utilization from the production sites led to an increase in the EBITDA and EBIT margins in Q2/2017 to 14.1% and to 9.9% respectively.
SONGWON extended its antioxidant range for fuels and lubricants in the second half of 2016 and introduced SONGNOX® L670 which has been well-received by customers. The organization now also has a world scale plant for its new aminic product range starting up production in Ulsan in Q3/2017. This, together with other developments, gives SONGWON good reason to expect continuous growth providing the demand remains at stable levels. From an historical perspective, Q2 has been a strong quarter and the Group expects to see the general demand for its products steadily increase in 2017 at a rate which slightly exceeds the global GDP.
However, with the overall global economic situation remaining volatile combined with the high levels of political uncertainty and instability in various regions across the world, SONGWON will remain cautious, as well as vigilantly aware of the potential for negative surprises. The Group will continually review situations as they arise and ensure that it has solid contingency plans in place, while exercising the prudent management of its capital and continue to progress with various initiatives to maintain profitability.