Hansol Paper Rebound Possible... Operating Profit Expected to Improve 140% in First Half of Year

Q2 Operating Profit Expected to Reach 20.6 Billion KRW, Up 36% YoY

Hansol Paper, which saw its operating profit sharply decline last year due to a severe downturn in the business environment, has embarked on improving its performance. Thanks to the recovery in exports and other factors, its operating profit for the first half of this year is expected to increase by 140% compared to last year.

According to financial information provider FnGuide on the 12th, Hansol Paper's operating profit for the second quarter of this year is expected to reach 20.6 billion KRW, up 36% from the same period last year. If the company achieves this forecasted performance, its operating profit for the first half will increase by 140% compared to the same period last year. However, second-quarter sales are expected to slightly decline to 508.1 billion KRW compared to the previous year.

Hansol Paper posted a surprise performance in the first quarter of this year. Its operating profit was 34 billion KRW, a 367% increase from the same period last year. This was due to the base effect, as operating profit in the same period last year was only 8 billion KRW. Accordingly, the industry expects that if Hansol Paper cannot sustain the strong performance from the first quarter into the second quarter, an overall performance rebound this year will be difficult. However, Hansol Paper is expected to achieve good results in the second quarter due to increased exports, signaling a positive outlook for a performance rebound this year.

Hansol Paper's second-quarter performance is analyzed to be influenced by increased exports of specialty paper with high profit margins, driven by economic recovery in advanced markets such as North America. Specialty paper is used for labels and receipts, and Hansol Paper produces 320,000 tons annually, ranking among the world's top producers.

A Hansol Paper representative said, "In advanced countries like the United States, sales of delivery labels remain steady, and in developing countries, the receipt paper market is growing, which is helping our performance."

The paper industry expects solid performance to continue in the second half of the year. This is because global elections are scheduled in various countries this year, which is expected to boost demand for printing paper. Additionally, competitors in the North American market are expected to raise prices for specialty paper, and Hansol Paper is also anticipated to follow suit, improving profitability.

However, the recent continuous rise in maritime freight rates and raw material pulp prices poses a challenge. The Shanghai Containerized Freight Index (SCFI), a global maritime container freight indicator, recorded 3733.8 as of the 5th, marking a 13-week consecutive increase. Last month, the price of Southern Bleached Hardwood Kraft pulp (SBHK) in the United States reached $895 per ton. Pulp prices have been rising continuously for a year since recording $565 per ton in June last year.

In response, Hansol Paper plans to diversify its portfolio by expanding its eco-friendly materials business. It is developing a business using 'Protego,' an eco-friendly paper packaging material that can replace plastic or vinyl packaging. The company is also developing various packaging materials using a type of bio-plastic cellulose microfibers made by breaking down plant fibers to the nano scale.