Ssangyong C&E, Operating Profit Down 98% Due to Sharp Rise in Thermal Coal Prices

Sales increased by 12% YoY due to rising demand and price hikes
Significant performance improvement expected after Q2 reflecting price increase effects
Major investment impact in recycled resources also fully reflected...Expecting remarkable management performance improvement

Exterior view of Ssangyong C&E Donghae Plant. [Photo by Ssangyong C&E]

[Asia Economy Reporter Kim Jong-hwa] Ssangyong C&E recorded consolidated sales of 376.2 billion KRW and operating profit of 400 million KRW in the first quarter of this year. Compared to the same period last year, sales increased by 12%, while operating profit decreased by 98%. This is due to the surge in the price of thermal coal, which accounts for about 40% of manufacturing costs, and the sharp rise in prices of other raw and subsidiary materials, leading to an increase in manufacturing costs.

The main reason for the increase in Ssangyong C&E's first-quarter sales was the rise in shipment volume due to the recovery of domestic cement demand and the impact of the cement price increase in the second half of last year (from July 1, 2022, 3,800 KRW/t).

The international thermal coal price, which was the main cause of the decrease in operating profit, rose more than twice from an average of mid-60 USD per ton in 2020 to around 130 USD in 2021, and this year surged to a record high of 427 USD following the Ukraine crisis, maintaining around 300 USD in March.

Ssangyong C&E, facing an internal limit where it was difficult to bear the long-accumulated manufacturing cost increases, raised the selling price to 90,800 KRW per ton starting from shipments in April.

Ssangyong C&E expects significant performance improvement from the second quarter onward, when the effect of the price increase is fully reflected. Additionally, once the large-scale investment effect aimed at reducing fossil fuel thermal coal and increasing the use of recycled resources is fully realized, remarkable management performance improvement is also anticipated.

A Ssangyong C&E official stated, "This year, both sales and operating profit are expected to increase due to the rise in cement demand, price increases, and profit growth through the expansion of environmental business," adding, "While maintaining the growth momentum of the cement business, we will strengthen sustainable management by continuously discovering and expanding environmental businesses."

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