Operating Profit Quadrupled in Q1
Impact of Product Price Increase and Raw Material Cost Decrease
Goal to Secure Cost Competitiveness through Productivity Improvement
Hansol Paper, which recorded surprising performance in the first quarter of this year, is strengthening its fundamentals through digital transformation (DX). The company plans to continue its strong performance by improving productivity and securing cost competitiveness through DX.
According to the quarterly report on the 19th, Hansol Paper recorded sales of 534.1 billion KRW and an operating profit of 34 billion KRW in the first quarter of this year. Compared to the same period last year, sales decreased by about 5%, but operating profit increased by 336%.
The reason Hansol Paper was able to achieve surprising results was due to product price increases and the downward stabilization of raw material pulp prices. In December last year, Hansol Paper raised prices by reducing the discount rate on industrial paper and printing paper sold to wholesalers by 8%. In addition, the price per ton of pulp fell by about 15%. The price per ton of pulp dropped from an average of 659 dollars last year to 562 dollars at the end of the first quarter this year. Considering that operating profit decreased by 70% year-on-year due to the rise in raw material prices last year, this is evaluated as laying the foundation for performance recovery.
However, despite the more than fourfold rebound in operating profit, there are concerns in the market’s view. This is because the paper industry market itself is still stagnant, and performance can be affected by fluctuations in the won-dollar exchange rate. In fact, Hansol Paper benefited from exchange gains in North American exports as the won-dollar exchange rate rose in the first quarter of this year compared to the same period last year, resulting in decreased sales but increased operating profit. Also, the recent resurgence in pulp prices, which account for half of paper production costs, is another reason why the remaining quarters’ performance this year cannot be guaranteed.
Accordingly, Hansol Paper plans to increase productivity and secure cost competitiveness through DX. Its holding company, Hansol Holdings, has invested in DX for several years, and this year, results are appearing in each affiliate. The core affiliate, Hansol Paper, is showing concrete changes first. A representative example is the establishment of the first big data platform in the domestic paper industry. A big data platform is a technology that extracts meaningful information through various analytical methods from data collected based on cloud technology and helps efficient decision-making.
Through this big data platform, Hansol Paper stores and manages about 100,000 data sources such as electricity and steam usage, and equipment temperature generated in production processes at each factory including Janghang, Daejeon, Cheonan, and Sintanjin on a single platform. Artificial intelligence (AI) technology is used to manage the information generated in each production process. Hansol Holdings has been investing in AI platform development since 2022. Especially last year, it focused intensive investment on AI-based technology research for manufacturing environment issues, and the platform was launched this year.
Hansol Paper explained that by managing and analyzing all data on the platform, it can optimize equipment operation, increase productivity, and establish a foundation to secure cost competitiveness. Also, since inventory and production information by warehouse can be checked anytime and anywhere, it pursues work efficiency and helps decision-making. A Hansol Paper official said, “Digital transformation is becoming an essential factor for the survival and growth of companies in the future,” adding, “We plan to actively introduce various digital technologies to create new business value and innovate corporate management methods and processes.”
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