Songwon Industrial Group has released its financial results for Q3/2019.
In Q3/2019, the Group achieved sales of KRW208,388M, marking a 1.9% increase in revenue over sales recorded in the same quarter of the previous year (KRW204,403M), however, the Group reported a decline in its gross profit margin in Q3 to 19.7%.
Comparing the YTD September 2018 consolidated sales (KRW592,716M), Songwon saw a 4.1% increase in its YTD September 2019 consolidated sales (KRW617,272M) and a decrease in net profit of 12% (KRW28,905M).
Despite continuing uncertainty in global markets, the Group reported that in general, overall demand remained at a good level and in line with the organisation’s expectations.
In particular, Songwon’s Industrial Chemicals Division performed strongly in the first two months of the quarter but noted a decline in the final month.
Throughout Q3, Songwon’s Division Performance Chemicals experienced a more challenging market environment caused by fierce pricing pressures, the Korean long holiday period, the weakening of the KRW and the need to source raw materials from outside Korea.
The ongoing China-US trade war has driven Chinese competitors to aggressively seek new markets to compensate for China’s lower internal demand and reduced export to North America, which has led to lower market demand throughout the entire Asian region.
Across the industry, the impact of a slowdown in both the business-to-consumer market and automotive market, particularly in India, China and Europe was also felt by Songwon and the resulting adjustment in the overall supply and demand led to an increased pressure to reduce prices.
During Q3/2019, raw materials continued to remain in good supply, Songwon’s production facilities ran smoothly with high capacity utilisation levels to meet customers’ demands and its innovation labs also operated at high levels over the quarter and continued to support the businesses well.
In the third quarter, Songwon established a strong distributor network in the USA for its coatings business and to accelerate market penetration and expansion, the company entered a partnership with Uniwel, the largest PVC stabiliser producer in China.
Songwon expects to see this partnership and the addition of new stabilisers to its portfolio from Uniwel’s product lines, enhancing the market growth of its Performance Chemicals Division going forward.
Moving towards the end of the year, the Group expects to observe the traditional slowdown as customers’ year-end de-stocking activities begin and the challenging market conditions caused by the US trade war with China, Brexit and other political and economic uncertainties across the globe continue.
Facing these challenges, Songwon intends to continue focusing on its expansion strategy for South East Asia, Europe and North America and is confident that it is well-positioned to offset any emerging challenges with its broad portfolio, industry experience and global reach.
The company also intends to leverage its innovation strength to support the industry’s transition to a circular economy with environmentally friendly solutions.
Furthermore, the Group will be keeping a close watch on emerging global trends and developments and exercising financial discipline in all areas of its business, while continuing to drive productivity.
The Q3 Report can be downloaded at: www.songwon.com/investors/repo….
