Kumho Petrochemical Reports Q3 Earnings Shock... Operating Profit Down 63%

Sales of 1.8871 trillion KRW... Down 15.6% YoY
Impact of Demand Contraction Due to Global Economic Downturn

Kumho Petrochemical Management Performance

[Asia Economy Reporter Choi Seoyoon] Kumho Petrochemical recorded an 'earnings shock' below market expectations due to weak demand caused by the global economic downturn.

Kumho Petrochemical announced on the 4th that its consolidated operating profit for the third quarter of this year was 230.5 billion KRW, a 63.1% decrease compared to the previous year. Sales amounted to 1.8871 trillion KRW, down 15.6% over the same period.

Both operating profit and sales fell short of market expectations by 14.8% (39.9 billion KRW) and 15.9% (356.5 billion KRW), respectively.

By segment, the synthetic rubber business recorded an operating profit of 84 billion KRW, down 62.2% from the previous year. This was due to a decrease in sales volume of NB latex, a material for sanitary gloves that benefited from COVID-19 demand last year. Kumho Petrochemical expects NB latex demand and market prices to remain weak in the fourth quarter as well.

The synthetic resin business posted an operating loss of 6.2 billion KRW in the third quarter, turning to a deficit. Kumho Petrochemical explained, "Demand in the home appliance market declined, and product prices remained weak due to excess inventory in the market, resulting in decreased profitability." The company anticipates continued weak market demand in the fourth quarter.

The phenol derivatives business recorded an operating profit of 21.8 billion KRW, a sharp decline of 91.8% compared to the previous year. The spread (margin) of major products shrank due to sluggish demand in downstream industries.

The ethylene propylene diene monomer (EPDM) and thermoplastic vulcanizate (TPV) business achieved an operating profit of 50.8 billion KRW, up 25.9% from a year ago. The company explained that profitability was maintained due to steady demand in downstream industries. In the fourth quarter, profitability is expected to slightly decrease compared to the previous quarter due to year-end demand weakness.

The energy sector also improved profitability due to a rise in the wholesale electricity price (SMP) compared to the previous quarter. Regarding the fourth quarter outlook, Kumho Petrochemical stated, "Despite a decrease in sales volume due to scheduled maintenance, profitability will be maintained thanks to the increase in SMP."

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