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Hyosung units post record Q1 earnings, justifying high valuation

By May 03, 2021 (Gmt+09:00)

Hyosung Group Chairman Cho Hyun-joon
Hyosung Group Chairman Cho Hyun-joon

The major subsidiaries of South Korea’s textile and chemicals conglomerate Hyosung Group have delivered positive earnings surprises for the first quarter of 2021, justifying the group’s market capitalization, which has doubled since the year’s start.  

According to the industry on May 2, Hyosung TNC Corp.’s first-quarter operating profit recorded 246.7 billion won ($220 million), more than three times the 78.4 billion won ($70 million) seen in the same period last year.

The number marks the highest quarterly earnings in Hyosung TNC’s history, even higher than what was deemed an already high analyst consensus forecast of 185.5 billion won ($165 million) for the first quarter.   

Analysts say the standout performance was largely expected, as the global economic recovery is fueling higher demand for the group’s major products, from textiles and tire cords to chemicals.

Graphics by Jerry Lee
Graphics by Jerry Lee

Hyosung Chemical also delivered a striking 392.5% increase in operating profit in the first quarter of this year, posting 61.1 billion won ($54 million) versus last year's first quarter result of 12.4 billion won ($11 million).

The chemical unit’s revenue also grew by 39.2% during the same period to 591.1 billion won ($526 million). The company also posted a higher operating profit margin in the first quarter, thanks to a price hike in its major products such as polypropylene (PP).

The operating profit margin of Hyosung Advanced Materials, the global market leader of tire cords, also surpassed 10% for the first time in the company’s history, more than double last year’s 4.1%, with an operating profit of 83.3 billion won ($74 million) and revenue of 769.4 billion ($685 million).

Another major affiliate, Hyosung Heavy Industries, which had reported a net operating loss in the first quarter last year, made a positive turnaround with an operating profit of 17.5 billion won ($15 million) in the first quarter.

Hyosung’s performance has mostly to do with the group’s aggressive production facility expansion last year even during the pandemic, as it was able to address the greatly increased demand this year.

Armed with the conviction  that he could turn the COVID-19 crisis into an opportunity to widen the company's gap with its competitors, Hyosung Group Chairman Cho Hyun-joon ordered Hyosung TNC, the global market leader of spandex, to expand overseas investment last year in Brazil, China, India and Turkey.

The chairman’s decision, made despite a sharp drop in spandex demand, proved fruitful this year when clients began placing a high volume of orders with Hyosung TNC. The global spandex market is experiencing disproportionately high demand and drastic price hikes since the second half of last year.

Hyosung Chemical’s Vietnam factory, which began partial operation this year, is also expected to play a bigger role within the group starting from next year.

In 2018, Hyosung Chemical started building the chemical plant in the Southeast Asian country to produce PP and other petrochemical products by investing a total of 1.5 trillion won ($1.3 billion won), equivalent to its annual revenue at the time.

“Our performance across all businesses is expected to remain strong for quite some time,” commented a Hyosung Group official.  

Write to Jae-kwang Ahn at

Daniel Cho edited this article.

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