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Fiber & Textile

Kolon Industries posts strong Q2 results with growth in all key areas

Biodegradable plastic products will be the company’s next growth engine

By Aug 04, 2021 (Gmt+09:00)

Kolon Industries Gumi plant produces aramid fiber used in 5G cables.
Kolon Industries Gumi plant produces aramid fiber used in 5G cables.

Kolon Group’s industrial materials maker Kolon Industries Inc. saw a quarterly operating profit over 100 billion won ($87 million) for the first time in 10 years. Analysts say that the second-quarter earnings were particularly remarkable in that the company generated most of its profit from new business areas.  

Kolon Industries on Aug. 3 reported an operating profit of 103.6 billion won ($90.3 million), up by 181.8% from the same period in 2020, on revenue of 1.18 trillion won ($1.03 billion). Last time its quarterly profit surpassed 100 billion won ($87 million) was the second quarter of 2011. The analysts project the company’s full-year profit to reach at least 300 billion won ($261 million).

The company in 2011 reported a high annual operating profit of 402.1 billion won ($350 million), driven by the strong sales in petrochemical products, but soon faced a decade-long downturn due to the recession in the chemical industry. Kolon Industries insiders say it was during this period when the company started to invest heavily in future growth areas such as aramid.

Thanks to the continued investment during the recession, the company’s stellar second-quarter performance was largely driven by the three future-oriented materials: aramid, colorless polyimide (CPI®) and tire cord.

Aramid, often called a super fiber material, is widely used to protect and prevent internal components of 5G cables from sagging. The company’s CPI® films are used on foldable devices ranging from smartphones to laptops, while its tire cords are used by electric vehicles.

HERACRON® is the company’s brand name of aramid fiber used in 5G cables. 
HERACRON® is the company’s brand name of aramid fiber used in 5G cables. 

“The business areas that we invested heavily during the time of recession have now grown into stable revenue generators,” said a Kolon Industries official.

The company lately has been focusing on the development of environmentally sustainable products such as biodegradable plastics. Earlier this year in April, Kolon Industries formed a strategic partnership with SK Global Chemical Co., a petrochemical subsidiary of SK Innovation Co., to produce biodegradable polybutylene adipate-co-terephthalate (PBAT) plastic.

At the same time, the company’s performance in the fashion business and traditional chemicals were equally strong in the second quarter. Its petroleum resins, used for tire cords, and epoxy resins for electronic components saw strong sales. The performance in the fashion segment was largely driven by its luxury golf wear brand G/FORE, launched last year, which rapidly gained popularity among Korea’s golf-loving millennials.

G/FORE has successfully positioned itself as a luxury golf wear brand.
G/FORE has successfully positioned itself as a luxury golf wear brand.

“Kolon will continue to provide key materials for the global 5G, EV and hydrogen sectors,” said Kolon Industries CEO Jang Hee-goo.

Meanwhile, the company’s industrial plastics subsidiary Kolon Plastics Inc. has also reported a second-quarter operating profit of 8.3 billion won ($7.2 million) on revenue of 100.1 billion won ($87.3 million). Kolon Plastics said that it made a positive turnaround and reported its highest-ever quarterly revenue due to strong demand for its engineering plastic products.  

Write to Jeong-min Nam at peux@hankyung.com

Daniel Cho edited this article.

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