SKC

●  Continued efforts to sophisticate its business structure; The annual earnings forecast is expected to be achieved with increased operating profit after 2Q

SKC (CEO Lee, Wan-jae) posted sales of KRW 604 billion and an operating profit of KRW 36.2 billion in 1Q. Although its sales and operating profit fell by 5.4% and 12.1%, respectively, from the first quarter of last year, profitability was considered stable given the slowdown in demand due to trade disputes and seasonally unfavorable effects. In particular, the industry materials division succeeded in swinging into the black. Overall, SKC expects to meet its annual earnings forecast (operating profit of KRW 210-230 billion).

On May 10, SKC announced its business performance of the first quarter of 2019 at Shinhan Investment Corporation Building in Yeouido with the attendance of executives including Won Ki-don, Chief Operating Officer and Chief of the Chemical Business Division; Lee Yong-sun, Chief of the Industry Materials Business Division; Oh Jun-Rok, Chief of Growth Business Division, and Pi Sung-hyun, Chief of Management Support Division.

The industry materials business, which produces film materials, recorded sales of KRW 249.4 billion and an operating profit of KRW 3.6 billion. Despite seasonally low demand and raw material price hikes, the division managed to turn profitable thanks to improved earnings of subsidiaries. From 2Q, its performance should continue to improve on the back of stable raw material prices, strong demand for heat-shrinkable films, and expanded sales of eco-friendly products.

The chemical division, which produces PO (propylene oxide) and PG (propylene glycol), posted sales of KRW 192 billion and an operating profit of KRW 27.1 billion. This is mainly because Chinese demand for polyurethane decreased due to increasing uncertainties amid the trade war and the price of PG fell as raw material PO temporarily funneled into PG production. In 2Q, its earnings are forecast to improve on the back of the recovering economy of China and regular maintenance of major companies.

The growth business division recorded sales of KRW 162.6 billion and operating profit of KRW 5.5 billion. The semiconductor material business saw its sales rise 14% YoY despite setbacks in downstream industries. The telecommunications equipment business experienced a temporary decline in earnings due to seasonally weak demand. The beauty and health care materials division showed results similar to last year. In 2Q, its performance is expected to grow with the increase in CMP materials sales, telecom equipment orders, and cosmetics materials sales.

An SKC official said, "Currently, SKC is continuing its efforts to add value to the industry materials business and sophisticate its business structure by increasing eco-friendliness, semiconductors, and automobile materials. With a steady increase in quarterly operating profit, we expect to achieve the annual earnings forecast presented at the beginning of this year." [End]