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SONGWON 2020 second quarter financial performance report

Company News > SONGWON 2020 second quarter financial performance report

SONGWON Industry Group released its financial performance report for the second quarter of 2020. The report pointed out that the group's consolidated sales in the quarter reached 198.145 billion won, a decrease of 9.3% in revenue compared with the second quarter of 2019. However, year-to-date (YTD) sales as of June 2020 were 408.688 billion won, which was basically the same as and almost at the same level as the first half of 2019 (408.884 billion won). In the second quarter of 2020, the group's gross profit margin reached 21.1%, an increase of 1.4% over the first quarter of 2020.

From 2019 to 2020, the Korean National Taxation Service conducted tax audits on the group's accounts from 2015 to 2017. The audit results had a negative impact on the group's net profit in the second quarter of 2020 (5.422 billion won). According to the final assessment notice, the parent company agreed to pay 10.4 billion in income tax expenses, part of which was offset by offsetting the available deferred tax provisions for taxed transactions. As a result, net profit at the end of the second quarter of 2020 will be reduced by 4.5 billion won. SONGWON has a detailed contingency plan, so it will assess whether it is possible to appeal the tax assessment results.

In the first quarter of 2020, customers were worried that the new crown pneumonia epidemic might cause supply interruptions, so a large amount of inventory was hoarded, which made the revenue growth of the quarter good, and therefore, the demand slowed down in the second quarter of 2020. Therefore, the operating performance of the chemical raw materials (-6.7%) and high-performance chemicals (-3.5%) sectors is still lower than the data in the first quarter of 2020, but the year-to-date data is consistent with the previous year.

The Chemical Materials Division pointed out that its entire product portfolio in the second quarter of 2020 experienced negative price growth. The continued reduction in raw material costs, the shifting of orders from customers to the third quarter of 2020, and the reduction in demand from the automotive, home appliances and construction industries have all led to a decline in sales in the chemical raw materials sector this quarter. Nevertheless, due to the reduction in raw material costs and the positive progress in foreign exchange in the second quarter of 2020, the profit margin of this sector has increased compared with the first quarter of 2020.

In the second quarter of 2020, the demand for PVC additives fell, and the sales of the high-performance chemical sector throughout the quarter were affected, especially in South Korea, because the already sluggish construction industry was further adversely affected by the new crown pneumonia epidemic. However, the decline in raw material costs has also benefited the department and provided support for the department's business. In addition, in the second quarter of 2020, the sales of tin intermediates/catalysts in the high-performance chemicals segment increased, partly because it took full advantage of the opportunities brought by the suspension of production by competitors in Europe and the Americas.

During the quarter, SONGWON operated as usual, but due to the expected decline in demand, the capacity utilization rate was reduced accordingly in the second quarter of 2020. In order to ensure uninterrupted business and minimize the impact of this global pandemic, SONGWON took timely action and adopted various measures throughout the organization to maintain production, ensure continuous supply and protect employee safety.

The new crown pneumonia epidemic has caused a large-scale disruption of global business and has also exacerbated the financial challenges facing the world. Looking ahead to the second half of the year, the final impact, duration, or extent of the economic recovery of the new crown pneumonia epidemic is still unclear. In view of this, it is impossible for us to accurately predict what will happen in the next few months. In view of the uncertainty of the current situation, SONGWON will continue to pay close attention to the situation and the level of demand, and at the same time continue to improve all levels of the organization in accordance with the current strategy, and maintain close contact with customers and suppliers to ensure rapid response to new developments.

Although SONGWON predicts that demand in the third quarter of 2020 will be lower than usual, we see that restrictions are currently being relaxed in many places, so we believe that global business activities will gradually resume in the next few months, and a recovery may occur at the end of the year. SONGWON believes that with the emergency plan formulated before the epidemic, combined with the Group's solid business foundation, it is expected to lead the way during this difficult period and establish more stable cooperation with customers and valuable industry participants Partnerships.

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SONGWON 2020 second quarter financial performance report

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