[Click eStock] "KCC, Silicon Business Margin Improvement Phase"

[Asia Economy Reporter Ji Yeon-jin] Hana Financial Investment announced on the 15th that although KCC's sales in the fourth quarter of last year fell short of estimates, it does not believe that the margin improvement trend of its silicon subsidiary Momentive has slowed down.

Yoon Jae-sung, a researcher at Hana Financial Investment, said, "The contraction in Momentive's margin from July to October last year was due to the sharp rise in raw material silicon metal prices," adding, "From November, the sharply dropped costs were applied, leading to a phase of margin improvement, and it is judged that a solid margin trend has continued in January as well."

KCC recorded sales of 1.51 trillion KRW in the fourth quarter of last year, up 1.3% from the previous quarter. Although the volume decreased due to the transition of the silicon business's CS&I (basic product group such as siloxane) line to high value-added products, the overall sales are estimated to have slightly decreased as prices rose mainly for high value-added product groups. Building materials and paints are analyzed to have slightly increased compared to the previous quarter due to price hikes.

Operating profit for the first quarter of this year is expected to be 68.3 billion KRW, down 43% from the previous quarter, significantly missing estimates. The operating profit of the silicon business is estimated at 38.5 billion KRW, expected to decrease by about 56% compared to 88.3 billion KRW in the previous quarter. The price pass-through for building materials and paints is also expected to be limited.

Researcher Yoon explained, "Due to the sharp drop in silicon metal prices, the EBITDA margin hit bottom in October and recovered sharply from November, but in December, various costs are estimated to have been reflected," adding, "This appears to be a temporary reflection of related maintenance costs due to the transition to a high value-added CS&I line and logistics costs due to regional diversification of raw material procurement."

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