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Songwon reports double-digit growth in quarterly sales and profit
FINANCIALS
reduced revenue by 8%. This decline was primarily attributed to weaker end-market demand resulting from global trade-related pressures, particularly in transportation and other consumer discretionary markets in China and Europe, the company reports. Lower selling prices as a result of lower raw material costs and increased competitive pressure reduced the segment’s sales total by 3%, and an unfavourable shift in foreign currency exchange rates also had a negative (-2%) impact on the segment’s quarterly revenue. For similar reasons reported EBIT decreased from $192 million in 2Q 2018 to $147 million this year, although the lower raw material costs counterbalanced the reduced selling prices, and continued cost management also partially offset the declines. Eastman does not expect underlying macroeconomic conditions to improve in the second half of 2019, apart from reduced customer inventory destocking. However, it does anticipate benefiting from cost reduction actions and the flow through of lower-cost raw materials. More information: www.eastman.com
Songwon reports double-digit growth in quarterly sales and profit
S
outh Korea’s Songwon Industrial Group reported consolidated sales of KRW218.5 billion (c. E170 million) and profit of KRW12.8 billion for the second quarter of 2019, representing year-on-year increases of 10.4% and 56.8%, respectively. These figures mark a return to solid growth for the company after its unexpectedly slow start to 2019 [ADPO, July 2019, pp. 9–10] and despite the continuing suboptimal market conditions for the worldwide chemical industry. Songwon reports that it ‘exceeded targets’ and achieved an increase in core volumes in 2Q 2019 although ‘global economic and political uncertainties [including escalation in the US–China trade war and Brexit uncertainty] were still acutely present’ throughout the reporting period. The second quarter is traditionally ‘robust’, the company says, and it noted stronger overall demand for both its Industrial Chemicals and Performance Chemicals divisions compared to the previous quarter. It achieved EBITDA of KRW32.8 billion (+58.5%) and EBIT of
10
Additives for Polymers
KRW23.5 billion (+90.7%) in 2Q 2019, with the related EBITDA and EBIT margins also increasing significantly to 15.0% and 10.8%, respectively. The Industrial Chemicals division, which mainly comprises the company’s polymer stabilizers product lines, achieved sales of KRW161.7 billion in 2Q 2019, up 12.7% compared to KRW143.5 billion a year earlier, aided by positive foreign currency effects and the price increases implemented in 2018, Songwon says. Sales in its Performance Chemicals division rose 4.5% to KRW56.7 billion, despite the continuing negative growth rate in South Korea due to the economic situation and the slowdown in the automotive industry, it reports. Sales were stable in the company’s domestic market at KRW44.6 billion (+0.9%) and showed good growth in all other regions. Europe experienced the highest growth, with sales up 16.7% year on year to KRW51.7 billion. Throughout the second quarter of 2019, all Songwon’s productions sites ran smoothly and at higher capacity utilizations than in the first quarter of the year, helping to optimize the company’s cost position in the period. Some raw material tensions and restrictions resulting from an accident in China were noted in the quarter but Songwon says it was unaffected by the shortages ‘due to its effective sourcing strategy involving multiple suppliers’. For the first half of 2019, the Songwon group realized consolidated sales of KRW408.9 billion, a 5.3% increase compared to KRW388.3 billion in 1H 2018, which it attributes to the positive impact of the price increases implemented across its portfolio combined with favourable foreign currencies over the six months. Net profit for the period increased by 9.6% to KRW21.6 billion. The company continued to invest in and expand its Technical Innovation Centre in Ulsan [ADPO, June 2017, p. 6] during the first half of 2019 and believes that this on-going process will drive long-term growth across its businesses. The innovation labs are operating at ‘high levels’ and additional expertise has been added to drive customer application and new product development work, Songwon reports. For the remainder of 2019, Songwon expects demand for its product portfolio to remain steady in line with the ‘solid performance’ seen in the second quarter, despite the ‘pervasive uncertainties’ across the globe. It anticipates that supply and demand will remain balanced and says that it will focus on maintaining its achieved price levels and on increasing its supply share in the markets it serves. More information: www.songwon.com
October 2019
reduced revenue by 8%. This decline was primarily attributed to weaker end-market demand resulting from global trade-related pressures, particularly in transportation and other consumer discretionary markets in China and Europe, the company reports. Lower selling prices as a result of lower raw material costs and increased competitive pressure reduced the segment’s sales total by 3%, and an unfavourable shift in foreign currency exchange rates also had a negative (-2%) impact on the segment’s quarterly revenue. For similar reasons reported EBIT decreased from $192 million in 2Q 2018 to $147 million this year, although the lower raw material costs counterbalanced the reduced selling prices, and continued cost management also partially offset the declines. Eastman does not expect underlying macroeconomic conditions to improve in the second half of 2019, apart from reduced customer inventory destocking. However, it does anticipate benefiting from cost reduction actions and the flow through of lower-cost raw materials. More information: www.eastman.com
Songwon reports double-digit growth in quarterly sales and profit
S
outh Korea’s Songwon Industrial Group reported consolidated sales of KRW218.5 billion (c. E170 million) and profit of KRW12.8 billion for the second quarter of 2019, representing year-on-year increases of 10.4% and 56.8%, respectively. These figures mark a return to solid growth for the company after its unexpectedly slow start to 2019 [ADPO, July 2019, pp. 9–10] and despite the continuing suboptimal market conditions for the worldwide chemical industry. Songwon reports that it ‘exceeded targets’ and achieved an increase in core volumes in 2Q 2019 although ‘global economic and political uncertainties [including escalation in the US–China trade war and Brexit uncertainty] were still acutely present’ throughout the reporting period. The second quarter is traditionally ‘robust’, the company says, and it noted stronger overall demand for both its Industrial Chemicals and Performance Chemicals divisions compared to the previous quarter. It achieved EBITDA of KRW32.8 billion (+58.5%) and EBIT of
10
Additives for Polymers
KRW23.5 billion (+90.7%) in 2Q 2019, with the related EBITDA and EBIT margins also increasing significantly to 15.0% and 10.8%, respectively. The Industrial Chemicals division, which mainly comprises the company’s polymer stabilizers product lines, achieved sales of KRW161.7 billion in 2Q 2019, up 12.7% compared to KRW143.5 billion a year earlier, aided by positive foreign currency effects and the price increases implemented in 2018, Songwon says. Sales in its Performance Chemicals division rose 4.5% to KRW56.7 billion, despite the continuing negative growth rate in South Korea due to the economic situation and the slowdown in the automotive industry, it reports. Sales were stable in the company’s domestic market at KRW44.6 billion (+0.9%) and showed good growth in all other regions. Europe experienced the highest growth, with sales up 16.7% year on year to KRW51.7 billion. Throughout the second quarter of 2019, all Songwon’s productions sites ran smoothly and at higher capacity utilizations than in the first quarter of the year, helping to optimize the company’s cost position in the period. Some raw material tensions and restrictions resulting from an accident in China were noted in the quarter but Songwon says it was unaffected by the shortages ‘due to its effective sourcing strategy involving multiple suppliers’. For the first half of 2019, the Songwon group realized consolidated sales of KRW408.9 billion, a 5.3% increase compared to KRW388.3 billion in 1H 2018, which it attributes to the positive impact of the price increases implemented across its portfolio combined with favourable foreign currencies over the six months. Net profit for the period increased by 9.6% to KRW21.6 billion. The company continued to invest in and expand its Technical Innovation Centre in Ulsan [ADPO, June 2017, p. 6] during the first half of 2019 and believes that this on-going process will drive long-term growth across its businesses. The innovation labs are operating at ‘high levels’ and additional expertise has been added to drive customer application and new product development work, Songwon reports. For the remainder of 2019, Songwon expects demand for its product portfolio to remain steady in line with the ‘solid performance’ seen in the second quarter, despite the ‘pervasive uncertainties’ across the globe. It anticipates that supply and demand will remain balanced and says that it will focus on maintaining its achieved price levels and on increasing its supply share in the markets it serves. More information: www.songwon.com
October 2019