[Click eStock] NFC, UV Filter Ingredient Sales Expected to Improve

[Asia Economy Reporter Ji Yeon-jin] Recently, amid controversies over the human health hazards of organic UV filters, the growth of inorganic UV filters is anticipated, drawing attention to NFC, a specialized cosmetic raw material company.

NFC was established in 2012 and manufactures and sells cosmetic raw materials and finished products (OEM/ODM) based on its unique material technology. The sales composition (as of 2019) is 69% domestic materials, 7% overseas materials, and 24% finished product ODM/OEM. The major material sales composition (as of 2019) is 46% moisturizers, 27% emulsifiers, 13% UV filters, and 14% others.

The company independently developed the inorganic synthesis technology required for manufacturing UV filters domestically for the first time in the second quarter of last year. To produce UV filters, synthesis technology for titanium dioxide and zinc oxide is essential, with the technology for synthesizing titanium dioxide being particularly challenging. Globally, only 5 to 6 companies possess this technology, and NFC is the only one in Korea.

Korean cosmetic companies have mostly imported these materials from Japan, and especially in 2019, domestic companies faced difficulties due to supply shortages caused by excess demand in Japan. The global UV filter market has grown at an average annual rate of about 9.1% since 2013, and with recent concerns over the human health hazards of organic UV filters, the inorganic UV filter market is expected to grow significantly in the future.

The company plans to begin full-scale sales of these materials within the first half of this year, and this business is expected to become a strong growth momentum going forward. This year, sales are projected to increase by 26% year-on-year to 42 billion KRW, and operating profit is expected to rise by 109% to 9.2 billion KRW.

Seochungwoo, an analyst at SK Securities, said, "Although operating conditions were somewhat sluggish last year due to the impact of COVID-19, we believe there will be an overall improvement this year thanks to the calming effect of vaccinations and other factors. It is estimated that purchase orders surged at the end of last year, and the fact that titanium dioxide, a raw material for UV filters expected to contribute significantly to future performance, will be sold in earnest starting this year is also positive."