Mixed financial results from petrochemical companies in South Korea

25-Aug-10
South Korean companies have revealed their financial results for Q2-2010 over the week. Some petrochemical companies saw considerably better figures for the April-June period, as per Chemorbis. A statement from the Central Bank that South Korea’s economy grew 1.5% in the quarter from three months earlier and 7.2% year on year – indicating a visible recovery in the country’s economy after a global downturn. However, majority of the companies reported losses or lower profits for the quarter due to sliding margins as a result of new capacities from China and the Middle East. According to an announcement from Yeochun Naphtha Cracking Center (YNCC), S Korea’s largest producer of ethylene, the company recorded higher net profits during the second quarter of this year of Won 103.0 bln (US$87.1 mln) when compared to Won 51.3 bln in the same quarter last year, with the company attributing the doubled figures to the increasing prices of their products, as well as stabilized naphtha costs. Moreover, YNCC’s operational profit indicated a large jump of 89.7% for Q2 to Won 140.6 bln, from Won 74.1 bln previously, while the company’s sales in the quarter ended June with a jump of 39.1% to Won 1.53 trillion when compared with Won 1.10 trillion a year earlier. Taekwang Industrial also announced that they posted a net profit of Won 102.8 bln (US$86.3 mln) for the second quarter of this year, which was more than five times larger when compared to Won 19.9 bln a year earlier. The company’s operating profit was up to Won 117.5 bln for April-June, compared to Won 31.3 bln in the same period last year, while their sales also jumped 34% to Won637.4 bln from Won 474.9 bln a year earlier. In Q2-2010, South Korean acrylonitrile-butadiene-styrene and engineering plastics producer Cheil Industries saw Q2 net profit rise 9% on the year. The company posted an operating profit of its mainstay chemicals segment which rose 8.7% on the year in thee quarter on solid demand from China. The country’s third largest refiner S-Oil saw the operating profit of its petrochemical segment plunge 96.8% year over year to Won 1.9 bln (US$1.6 mln) in Q2 despite a slight rise of 0.9% in the sales of the petrochemical segment for the year 2010. The company attributed the downward move in their profit to sizable supply increases from new petrochemical capacities, which narrowed their margins. Similar negative figures also came from The Korea Petrochemical Industry Co. (KPIC), who announced their Q2 net profit with a decrease of 62.7% from a year earlier despite a 7.8% rise in their sales. The company earned Won 20.9 bln ($17.7 mln) net profit for April-June, when compared with Won 56.0 bln in the same period last year. The company’s operating profit also fell 46.7% year on year to Won 35.5 bln, from Won 66.6 bln recorded a year earlier. KPIC pointed to new capacities as well as to the lower foreign exchange rates as a reason for the drop in their net profits despite the positive sales figures. KP Chemical was another company hit by the new capacities this year. The company recorded lower net profits during the quarter although sales rose 10.5% year on year to Won 612.0 bln from Won 553.9 bln a year earlier. The company’s net profit indicated a drop of 26.4% year on year to Won 45.7 bln (US$38.7 mln), from Won 62.1 bln a year earlier due to weak margins as a result of higher global supply levels. According to an announcement from Daelim Industrial, the company revealed their operational profit in the first half of 2010 with a drop of 49.6% from the previous year at Won 35.8 bln (US$30.5 mln), whereas the company’s sales posted an increase of 32% from a year earlier to reach 539.1 billion over January-June.
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