Ulsan, Korea – Songwon, whose portfolio includes polyurethane products, reported total sales of KRW1.4bn ($1.07m), with a net profit of KRW132m and gross profit margin of 22.7%. The sales figure was up 33% on the previous year’s KRW998m, while the profit increase represented a rise of 85% over 2021’s KRW71.2m.
However, the fourth quarter figures paint a different picture. Revenues of KRW297m were up 5.0% from KRW283m, with profits dropping by 67.6%, from KRW26.1m in 2021 to KRW8.46m in 2022.
The company said that its strong end to 2021 was followed by “sound growth and increased revenues” at the start of 2022, with the positive momentum continuing until overall demand started to weaken in the third quarter. This, it said, was because of the growth in product availability, and customers starting to destock in the light of declining raw material costs.
“Despite this, and amid ongoing geopolitical tensions, supply chain bottle necks and rising variable costs across the regions, Songwon’s divisions benefited from robust demand in the first six months of 2022, and finished 2022 well,’ the company said. In the fourth quarter, performance in its industrial chemicals division were impacted by increased supply in the market and customer destocking. Revenue for polymer stabilisers fell because of aggressive pricing, the war in Ukraine, and shipping constraints.
The performance chemicals division also felt the impact of volatile prices and weaker, more unpredictable demand. However, it benefited from a fall in raw material costs. Declining raw material costs, along with price increases earlier in the year, allowed revenues and profitability for TPU and SPU to rise in the fourth quarter.
“Looking ahead to the coming year, the volatile political instability in various regions across the globe is expected to be ongoing in 2023, along with inflationary pressure on the world’s economy and the continuing decline in demand,” the company said.
However, it added that it is remaining reserved with its predictions. “With the current global macro conditions and particularly political and economic instability, supply chain pressures and demand unpredictability, it is difficult to assess accurately what the new fiscal year will bring.”
Currency conversion: xe.com
