- Today, Songwon Industrial Group (www.songwon.com) released its financial results for Q2. The Group announced sales of 157,009 Mil. KRW and a gross profit margin of 20.3% for Q2 - an increase of 6.5% points compared to Q2/2014.
- Marketing Solutions
- Ulsan, Korea – August 14, 2015 –
- SWPR130EN0815 Q2 2015 financial results
After a good start into the year 2015, with a significantly improved gross profit margin in Q1, Songwon saw a more predictable and robust Q2/2015 ─ despite the ongoing challenging market conditions.
In Q2, the economic situation in Europe continued to remain instable. Compared to Q2/2014, Songwon’s Q2/2015 results were affected by strong forex devaluations (EUR/USD, JPY/USD), and the oil price.
Due to the drastic weakening of the Euro against the Korean Won and other relevant currencies, Songwon experienced lower sales revenues in Europe at the beginning of the year. Business in Japan was similarly affected by the continued weakening of the Yen. In Q2, the decision was made to selectively go for price increases to offset volume losses at lower margin accounts.
The price increases in local currencies were successfully implemented but were partly eroded by an additional weakening of the FX against the KRW. This resulted in an overall reduction in consolidated sales of -6.5% compared to the first six months of 2014.
During Q2/2015, Songwon’s production sites ran steadily without any disruptions. Raw material costs in Q2/2015 were significantly lower when compared to Q2/2014, although a slight raw material price increase took place in Q2/2015 versus Q1/2015. In spite of this, there were also raw material shortages which negatively affected the availability of some finished products, particularly in the lube additive segment.
However, Songwon’s production stability coupled with selective price increases and significantly weaker raw materials in Q2/2015 as compared to Q2/2014, did lead to an impressive recovery of the gross profit margin. EBITDA and EBIT increased notably to 25,993 Mil. KRW and respectively 17,295 Mil. KRW during Q2/2015 compared to Q2/2014.
The reduction of uncertainties regarding foreign exchange rates combined with the stabilization of some political instability (especially Europe and the Near Middle East), is leading to a general upturn in economic activities. The polymer industry’s output is expected to increase significantly and subsequently lead to a higher demand for antioxidants. As the cost of raw materials slowly increases, the pressure on prices is expected to weaken and Songwon anticipates a higher demand for products on the back of the global recovery of economic activities.
The Q2 Report can be downloaded at: www.songwon.com/en/investors/financialresults.