SY, Q1 Operating Profit of 2.5 Billion Won 'Turned to Black'... "Effect of Color Steel Sheet Production"

[Asia Economy Reporter Yoo Hyun-seok] Comprehensive building materials company SWY achieved a profit in the first quarter, which is the off-season for the panel industry, due to the production effect of color steel sheets.

SWY announced on the 17th that it recorded sales of 72.2 billion KRW, operating profit of 2.5 billion KRW, and net profit of 2.8 billion KRW in the first quarter. This is the highest operating profit ever recorded for the first quarter, which is the off-season. The first quarter profit is the first in five years since 2016, when steady operating profits were recorded due to the construction boom. It is a return to profit after three quarters since the profit in the second quarter of last year.

The first quarter is traditionally the off-season for the architectural exterior materials industry. Due to seasonal factors, construction is often halted, and in the typical steel frame building construction process, foundation work is done in the first quarter, followed by exterior work in the second half of the year.

A company official explained, “In the sandwich panel industry, which produces architectural exterior materials, it is common to incur losses in the first quarter due to fixed production costs, recover profits through the second and third quarters, and record annual results with profits in the fourth quarter. SWY produces and sells color steel sheets, a major raw material for sandwich panels, in-house, and profitability has improved recently due to the steel market boom.”

Color steel sheets (colored galvanized steel sheets), used as exterior materials for building materials and home appliances, have recently seen prices skyrocket due to supply shortages. Demand and production of home appliances surged due to COVID-19, and with the construction market recovering, supply has not kept up with demand.

China, the largest steel supplier, is focused on meeting domestic consumption, and India, the second largest steel supplier, is also facing production disruptions due to the COVID-19 pandemic, making material supply difficult. The company expects that the shortage and price increase of color steel sheets will be inevitable for the time being.

SWY currently operates a total of five color steel sheet production lines (CCL): two in Korea, two in Vietnam, and one in Cambodia. The annual production capacity of color steel sheets reaches up to 400,000 tons. Not only domestically but also in Vietnam, the shortage of color steel sheets has become severe due to the boom of local global home appliance companies, leading to complete stock sell-outs and increased local production utilization rates.

A company official said, “Since listing, we have seen significant effects from large-scale investments to expand the CCL lines. Since early this year, we have focused on securing material supply and prepared for color steel sheet production and sandwich panel usage. By expanding external sales of color steel sheets and having an advantage in responding to sandwich panel cost ratios compared to competitors, if the market situation continues, record-high profits are expected.”