Cosmax Posts Strong Earnings Amid COVID-19... Q1 Earnings Surprise

[Asia Economy Reporter Song Hwajeong] Cosmax recorded a surprising earnings performance in the first quarter of this year despite the unfavorable market conditions caused by the novel coronavirus infection (COVID-19).

According to the Financial Supervisory Service on the 16th, Cosmax posted sales of 328.5 billion KRW and an operating profit of 16 billion KRW in the first quarter. These figures represent increases of 0.2% and 18.4%, respectively, compared to the same period last year. Na Eunchae, a researcher at Korea Investment & Securities, explained, "Operating profit exceeded consensus by 94%. Due to concerns over production disruptions in China caused by COVID-19, expectations for profitability were lowered, but thanks to a domestic surprise, the results greatly exceeded forecasts." Domestic sales increased by 6% to 202 billion KRW, and operating profit rose 112% to 16.4 billion KRW, significantly improving profitability. Researcher Na added, "The domestic strong performance is understood to be a combined effect of securing online clients, the special demand for hand sanitizers, and production efficiency improvements. Although the 14 billion KRW sales from hand sanitizers can be seen as a one-time event, securing new clients and production efficiency are factors that can be sustained, so we are raising the annual domestic operating profit margin from the previous 5% to 6.5%."

The second-quarter performance is expected to be influenced by recovery in China and sluggishness in the U.S. Park Hyunjin, a researcher at DB Financial Investment, said, "The domestic corporation is expected to maintain the margin improvement trend due to structural improvements in the second quarter. Although hand sanitizer production will decrease compared to the first quarter, demand is increasing compared to the same period last year, contributing to margin improvement. However, since the U.S. corporation's production plant normalization is delayed due to COVID-19, it will be difficult for second-quarter results to recover compared to the previous quarter."

Son Hyoju, a researcher at Hanwha Investment & Securities, forecasted, "While the domestic structural improvement effects continue, the Chinese corporation's performance recovery is expected from the second quarter. The U.S. and Southeast Asian corporations are likely to be hit in the second quarter as COVID-19 rapidly spread from March, but since the performance weight of the U.S. and Southeast Asian corporations is lower than that of the Chinese corporation, the impact of the Chinese corporation's performance improvement will be greater."

This content was produced with the assistance of AI translation services.