Songwon Industrial Group has released its financial results for the third quarter ending September 30, 2020.
In Q3/2020, the Group achieved consolidated sales of KRW195,237M, marking a 6.3% decline in revenue compared to sales for Q3/2019 (KRW208,388M).
Throughout the third quarter of 2020, Songwon witnessed ongoing global economic uncertainty due to the continuing COVID-19 pandemic which has subsequently disrupted markets and negatively impacted demand in many industries. Despite this, Songwon’s Division Performance Chemicals (+8.2% compared to Q3/2019) performed well throughout the quarter, seeing improvements across its businesses and signs of market recovery, notably in Korea, which resulted in increased demand. The Division saw higher sales in PVC Additives particularly in south east Asia and south Asia. Furthermore, the high plant utilisation rates led to an improved gross profit margin for Tin Intermediates/Catalysts.
For Songwon’s Division Industrial Chemicals, the challenging market environment in Q3/2020 led to a decline in revenue (-11.3%) compared to Q3/2019. There was a drop in the sale of Polymer Stabilisers mainly caused by lower market demand, which was only partially mitigated by an increase in relative market share combined with the slightly positive effect of foreign exchange rate developments. In addition, an erosion in price was identified in Q3/2020, which was driven by lower raw material costs. For Lubricant Additives, unforecasted higher demand with short lead times led to a strong result in the third quarter of 2020.
During Q3/2020, the Group benefited from the automotive market’s signs of recovery (with some exceptions) but recognises that a second wave of COVID-19 could lead to another decrease in demand.
In the third quarter, Songwon highlighted its ongoing commitment to sustainability with the release of SONGFLAME® WB 201. The latest solvent-free, aqueous, flame-retardant synergist was especially developed for the CASE (coatings, adhesives, sealants and elastomers) market and textile applications requiring flame-retardancy. Throughout Q3/2020, in order to maintain an optimal cost position, Songwon set its capacity levels to meet the demand and continued implementing its Business Continuity Plan measures.
The Group sees the remainder of the year remaining unpredictable due to the continuing uncertainty surrounding the duration of the pandemic and the challenging market environment it has created. Based on the increasingly heightened concern for a potential supply disruption caused by a second wave of COVID-19 pandemic, Songwon cautiously expects the increases in demand seen for performance chemicals in Q3/2020 to continue in Q4/2020 and possibly into 2021. Customers’ traditional end-of-year destocking is expected to have a general negative impact.
In response to current demand unpredictability, Songwon will continue progressing with additional plant utilisation to ensure it can respond to any sudden demand peaks with adequate supply, as well as to build safety stocks for its businesses.
Although the full effect of the COVID-19 pandemic and the rate of recovery are uncertain, the Group will be remaining cautious and closely monitoring the global situation and pandemic-related impacts on the industry and various markets. Having confidence in its resilient business model and continuous optimisation strategy, Songwon believes that the company is well-positioned to navigate these challenging times.
The Q3/2020 Report can be downloaded at: www.songwon.com/investors/repo...