SG Records 9 Billion Won in Q1 Sales...Cost-Linked Pricing Improvements Expected to Boost Q2 Results

SG, a specialist in asphalt concrete (ascon), saw its performance slow in the first quarter of this year due to seasonal off-peak demand and fluctuations in raw material prices. However, from the second quarter onward, the company is expected to recover its profitability, driven by improvements in the cost-linked pricing system.

On the 18th, SG announced that its consolidated sales for the first quarter of this year amounted to 9 billion won. This represents a 37% decrease compared to the same period last year. Operating loss was recorded at 6 billion won.

The company explained that, due to the characteristics of the ascon industry, maintenance and repair work on production facilities is concentrated in the winter months—from December to February—resulting in higher repair expenses and reduced shipment volumes. In addition, fluctuations in raw material prices caused by changes in the international situation in March further exacerbated profitability on a temporary basis.

However, the company expects a normalization of its profit structure as the positive effects of the improved cost-linked pricing mechanism are fully reflected from the second quarter. Previously, there was a time lag between increases in raw material prices and their reflection in sales prices, which placed a burden on profitability.

The expansion of eco-friendly business initiatives is also continuing. The company’s eco-friendly product, 'Eco Steel Ascon,' is an ascon product utilizing steel slag, which enhances competitiveness in terms of resource recycling and carbon reduction. SG is currently working to expand domestic supply and is also pursuing entry into overseas markets such as Ukraine, Russia, India, and Indonesia.

The company’s eco-friendly equipment business, 'SGR+,' is also experiencing growth in sales. SG predicted that, in line with the government and local authorities’ strengthening of environmental regulations, demand for eco-friendly equipment will gradually increase.

An SG representative stated, "Based on the largest production and sales scale in Korea’s ascon industry, we are achieving economies of scale in raw material procurement," adding, "With the introduction of the cost-linked pricing system, the impact of raw material price increases will be quickly reflected in sales prices going forward."

The representative continued, "Profitability temporarily declined in the first quarter due to the simultaneous impact of seasonal off-peak demand and geopolitical factors. However, from the second quarter, we expect a recovery in performance as the effects of sales price adjustments and business expansion are reflected."

SG is expected to accelerate its rebound in performance in the second half of the year, based on improvements in the cost-linked pricing system and expansion of its eco-friendly business.

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