Kolon Industries (120110) Q3 2024 earnings summary

Executive summary

• Sales reached KRW 1,100 billion in 3Q24, up 3.5% YoY but down 14.4% QoQ due to aramid facility maintenance and fashion off-season.

• Operating profit was KRW 33 billion in 3Q24, up 5.1% YoY but down 44.6% QoQ, with tire cord and hydrocarbon resins driving annual growth.

• Net profit turned to a loss of KRW 4 billion in 3Q24, compared to a profit of KRW 44 billion in the previous quarter and a loss of KRW 7 billion in 3Q23.

• For the first nine months of 2024, consolidated sales were KRW 3,544.7 billion and operating profit was KRW 122.9 billion, with net profit at KRW 59.97 billion, reflecting a significant YoY decline due to market headwinds and restructuring.

• Major events included completion of aramid pulp expansion, a JV with SK Microworks, and absorption of Kolon Glotech's automotive materials division.

Financial highlights

• Gross profit margin remained stable at 28% in 3Q24.

• Debt ratio improved to 88% in 3Q24 from 105% at FY23, and net debt ratio decreased to 56%.

• Total assets increased to KRW 6,146 billion, with equity rising to KRW 3,269 billion.

• Cash at end of period was KRW 196 billion, up from KRW 174 billion at the start of the quarter.

• R&D expenses for the first nine months were KRW 84.3 billion, 2.24% of sales.

Outlook and guidance

• Aramid facility maintenance expected to conclude in 4Q24, with an aramid pulp expansion line (+1.5kt) coming online.

• Aramid pulp expansion expected to drive profitability in 2025.

• Chemical division to benefit from expanded PMR capacity and new eco-friendly resin products.

• Fashion division is focusing on global market expansion and circular economy initiatives amid weak domestic demand.

• No explicit quantitative guidance provided.