Kumho Petrochemical's operating loss in the third quarter was 20.8 billion won... “Slow demand and weak prices” (comprehensive)

Kumho Petrochemical [011780] announced on the 6th that its operating loss in the third quarter of this year on a consolidated basis was provisionally calculated to be 20.8 billion won, a loss compared to the same period last year (operating profit of 84.4 billion won).

This operating loss differed from the market forecast compiled by Yonhap Infomax (operating profit of 64.2 billion won).

Sales amounted to KRW 1.9215 trillion, an increase of 16.9% compared to the same period last year. The net loss turned into a deficit of 22 billion won.

By sector, synthetic rubber recorded sales of 782.4 billion won and operating profit of 2.3 billion won.

Kumho Petrochemical explained that not only did the spread (the price difference between products and raw materials) narrow due to reverse lagging due to high-cost inventory of key raw materials and products, but also the decline in profitability due to wait-and-see demand and intensifying price competition for NB latex, a raw material for nitrile gloves, had an impact.

Reverse lagging is a phenomenon that occurs when product prices cannot keep up with the increase in raw material prices after expensively purchased raw materials are put into production.

The synthetic resin division recorded sales of 311.5 billion won and an operating loss of 13.9 billion won.

Profitability decreased along with continued price weakness due to sluggish actual demand, mainly for high value-added synthetic resins (ABS).

The sales and operating loss of the phenol derivatives division were 432.1 billion won and 62.5 billion won, respectively.

It turned into a loss due to delayed depletion of inventory of major products in the market due to sluggish demand in the downstream industry and narrowing spreads due to reverse lagging.

EPDM/TPV and other sectors recorded sales of 210.4 billion won and operating profit of 24.3 billion won.