Kolon Industries Q2 Operating Profit 59.4 Billion KRW... 21% Decrease YoY

94% ↑ Compared to Previous Quarter
Sales Reach 1.284 Trillion KRW

Kolon Industries announced on the 9th that its consolidated sales for the second quarter of this year were tentatively estimated at KRW 1.284 trillion, with an operating profit of KRW 59.4 billion. Compared to the previous year, sales decreased by 0.3% and operating profit declined by 21.4%. The operating profit margin stood at 4.6%.

Kolon Industries cited the prolonged Red Sea incident leading to increased global maritime freight rates and ongoing uncertainty due to inflation and prolonged high interest rates as factors for the slowdown in second-quarter performance compared to the previous year. Compared to the first quarter of this year, sales increased by 10.6% and operating profit rose by 94.1%. The improvement in performance quarter-on-quarter was driven by ▲strong performance in the industrial materials segment due to a robust new car and tire market ▲recovery in profitability of the chemical segment due to expanded demand in the upstream market ▲and the effect of entering the semi-peak season in the fashion segment.

Kolon One & Only Tower, Gangseo-gu, Seoul [Photo by Kolon Industries]

The industrial materials segment recorded sales of KRW 600 billion and an operating profit of KRW 39.1 billion. Compared to the previous year, sales decreased by 0.9% and operating profit by 4.9%. Compared to the previous quarter, sales increased by 6.1% and operating profit by 23%. The airbag business and the subsidiary Kolon Glotech’s car seat business performed well, driving sales growth compared to the first quarter. This was influenced by increased new car sales due to supply chain recovery. Operating profit increased quarter-on-quarter due to price hikes in tire cords. However, growth in aramid slowed due to delayed recovery in optical cable demand and weak pricing.

The chemical segment posted sales of KRW 263.2 billion and an operating profit of KRW 19.1 billion. Sales increased by 2.9% year-on-year, but operating profit decreased by 0.5%. Both sales and operating profit rose by 9.1% and 23.2%, respectively, compared to the previous quarter. The completion of high-purity petroleum resin (PMR) expansion and increased demand in upstream industries contributed to solid performance. Phenol resin also recorded steady results due to a shipbuilding industry boom.

The film and electronic materials segment recorded sales of KRW 55.4 billion and an operating loss of KRW 8 billion. Sales increased by 0.9% year-on-year, and the operating loss narrowed due to the reflection of discontinued operations in the film business. The company resolved at the board meeting held the day before to establish a joint venture for the film business with Hahn & Company. The company stated, "We will continue efforts to enhance efficiency in the film business with Hahn & Company."

Kolon Industries Recent Performance Trends [Image Source=Kolon Industries]

The fashion segment posted sales of KRW 326.6 billion and an operating profit of KRW 16.1 billion. Compared to the previous year, sales decreased by 1% and operating profit by 5.8%. The segment continues to maintain solid sales through a strong portfolio and entry into the seasonal peak period.

A Kolon Industries official said, "We expect global demand to recover in the second half of the year, supported by domestic stimulus policies in China," adding, "In the second half, we will focus on improving performance based on the completion of the aramid pulp expansion line and stable growth in the chemical segment."

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