[Click eStock] Kolon Industries Smiled in 2Q, Outlook for Second Half Also 'Clear'

Strong Earnings Driven by Increased Tire Cord Sales and Improved Fashion Business
Ongoing Structural Improvements... "Potential to Become Korea's Leading Hydrogen Industry Materials Company"

Kolon Industries Vietnam Tire Cord Factory Exterior View

[Asia Economy Reporter Minwoo Lee] Kolon Industries posted earnings in the second quarter that exceeded market consensus. Strong sales of tire cords and improved performance in the fashion business related to golf apparel are expected to drive solid results in the second half of the year.

On the 4th, KB Securities maintained a 'Buy' rating on Kolon Industries and raised the target price by 16.3% to 100,000 KRW. The closing price the previous day was 79,800 KRW.

Kolon Industries recorded consolidated sales of 1.1841 trillion KRW and operating profit of 103.6 billion KRW in the second quarter of this year. These figures represent increases of 25.6% and 181.5%, respectively, compared to the same period last year. The operating profit also exceeded market expectations by more than 14%.

The increase in profits from the industrial materials and fashion business divisions was a key factor. Operating profit from industrial materials in the second quarter was 48.6 billion KRW, up 37.7% from the previous quarter. The price of polyester (PET) tire cords rose compared to the first quarter, and profits from Kolon Glotech, which operates the car seat business benefiting from strong new car sales, are estimated to have increased by more than 50% quarter-on-quarter. The fashion business also posted an operating profit of 15.3 billion KRW, up 128.4% year-on-year. This was attributed to increased sales of golf apparel and outdoor wear, demonstrating high profitability.

Strong performance is expected to continue in the second half of the year. KB Securities forecasts Kolon Industries’ third-quarter operating profit to increase by 174.2% year-on-year to 78.7 billion KRW, as PET tire cord prices are likely to rise further.

Overall structural improvements were also cited as positive factors. Baek Young-chan, a researcher at KB Securities, said, "The new tire cord expansion in Vietnam in 2022 and the aramid expansion in 2023 will lead to structural growth in the industrial materials division. With the commercialization of hydrogen fuel cell materials (such as PEM and MEA), Kolon Industries is expected to emerge as a leading Korean hydrogen industry materials company from 2023 onward."

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