SG Expands Public Procurement Service Contract to 117.6 Billion Won... "Secures Timely Cost Reflection System"

SG has expanded its supply contract amount with the Public Procurement Service to 117.6 billion won, an increase of approximately 36.5% compared to the previous contract, thereby securing a stable profit structure that immediately reflects increases in raw material prices in its pricing.

According to SG on May 7, the contract amount for asphalt concrete (ascon) supply has increased by about 36.5%, from the previous 86.2 billion won to 117.6 billion won. This newly increased contract amount exceeds last year’s sales of 102.2 billion won, making it a large-scale agreement.

The company explained that the increase in contract value is the result of reflecting the rise in costs due to fluctuations in the price of asphalt (AP), the main raw material. In particular, as raw material prices have recently risen due to geopolitical risks in the Middle East, these changes have been promptly reflected in the unit price, which led to a significant increase in the overall contract amount. The adjusted contract unit price will apply to deliveries starting April 1.

This unit price adjustment was not the result of individual negotiations but based on a system in which the Public Procurement Service recalculates contract prices to reflect changes in raw material costs. It is regarded as an example that demonstrates the establishment of policies that institutionally reflect cost fluctuations in public procurement contracts.

Through this contract revision, SG has secured a foundation to maintain a stable profit structure even during rapid cost fluctuations. Going forward, the company will be able to flexibly adjust contract amounts in response to changes in unit prices and quantities. This is expected to contribute to stabilizing the profitability of SG’s main ascon business segment.

An SG representative said, "The key factors in the ascon industry are raw material procurement capability and supply chain, and SG is well positioned with a supply and production base focused on the Seoul metropolitan area, where demand is highest, giving it strong responsiveness. Additionally, with the institutional framework that allows for timely cost adjustments in public procurement volumes, the company can now conduct business even more stably."

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