In Its Second Year Since Launch, OCI Holdings Approaches Quarterly Sales of 1 Trillion KRW... Operating Profit at 89.5 Billion KRW

2Q Sales Increase 9.8% QoQ, Operating Profit Decreases 9.8%

OCI Holdings announced on the 5th that it recorded consolidated sales of 949.9 billion KRW and operating profit of 89.5 billion KRW for the second quarter of this year. Sales increased by 9.8% (85.1 billion KRW) compared to the previous quarter, while operating profit decreased by 9.8% (9.8 billion KRW). The operating profit margin stood at 9.4%.

OCI Holdings, which launched as a holding company on May 1 last year, explained, "It is difficult to compare with the same period last year because OCI's April earnings were reflected as discontinued operations in the second quarter of last year," adding, "In the second quarter of this year, changes in OCI's sales and profit structure were reflected in OCI Holdings' consolidated financial statements, contributing to the increase in sales."

At the end of January, the completion of a capital contribution in kind to OCI increased OCI Holdings' stake in OCI from 33.25% to 44.78%, and OCI's status changed from an affiliate to a subsidiary of OCI Holdings.

Net profit for the period in the second quarter of this year was 22.8 billion KRW, a decline of 88.1% compared to the previous quarter. OCI Holdings attributed the decrease in net profit to the absence of one-time factors such as the bargain purchase gain and foreign exchange gains related to the consolidation of OCI in the first quarter, adding, "The corporate tax expense of 41.2 billion KRW caused by the decrease in deferred tax assets of the Malaysian subsidiary OCIM in the second quarter also had an impact."

Looking at the second-quarter performance by major subsidiaries, OCIM, which produces solar polysilicon in Malaysia, recorded sales of 176.2 billion KRW, up 9.3% from the previous quarter, and operating profit of 55.5 billion KRW, up 48.4%, thanks to a stable operating rate of over 90% following regular maintenance in the first quarter.

OCI Enterprise (OCIE), the U.S. solar business holding company, posted sales of 35.7 billion KRW and an operating loss of 1 billion KRW, turning to a loss compared to the previous quarter. The company explained this was due to sluggish residential module business caused by oversupply of low-priced products and prolonged high interest rates. However, OCIE's subsidiary OCI Energy has been continuously generating profits, recently succeeding in selling the rights to the 260 MW Hillsboro solar power plant project to Hyundai Engineering. The proceeds from the sale will be recognized as revenue starting from the third quarter of this year.

"Solar Industry Also Faces the Chasm... Non-China Polysilicon Premium to Continue"

OCI Headquarters, Jung-gu, Seoul [Photo by OCI]

Seojin Seok, CEO of OCI Holdings, said, "To prepare for a decrease in orders from customers due to market uncertainties in the third quarter, we will strategically respond by proactively conducting legal maintenance of OCIM, originally scheduled for next year, from next month through December, closely monitoring the business environment."

He added, "In line with the planned expansion of polysilicon production facilities through 2027, we plan to secure new customers in regions such as Indonesia and Laos, in addition to the four Southeast Asian countries, to expand sales growth and profitability." OCIM's solar polysilicon meets RE100 requirements based on Malaysia's eco-friendly hydropower.

The industry expects the U.S. solar market to normalize after the second half of the year when the temporary oversupply is resolved. OCI Holdings stated, "Considering that the annual total production volume of non-China polysilicon is about 110,000 tons, the polysilicon premium supplied by OCIM is expected to be maintained from a mid- to long-term perspective."

Early Buyback of Treasury Shares Worth 20 Billion KRW Within the Year

Based on a stable cash holding capacity of approximately 1.7 trillion KRW as of the second quarter of this year, OCI Holdings plans to actively return value to shareholders.

At today's board meeting, OCI Holdings decided to conduct an early buyback of treasury shares worth 20 billion KRW within this year, in addition to the previously planned 40 billion KRW buyback and cancellation. The total shareholder return amount for OCI Holdings this year is expected to reach about 120 billion KRW (including 65 billion KRW in dividends, 40 billion KRW in the first buyback, and 20 billion KRW in the second buyback).

CEO Seojin Seok said, "Despite OCI Holdings' solid financial fundamentals, the current price-to-book ratio (PBR) is significantly undervalued at 0.4 times due to the impact of the U.S. presidential election and volatility in global financial markets," adding, "We will strengthen competitiveness across our business portfolio, including renewable energy, advanced materials, and pharmaceuticals & bio, and secure mid- to long-term growth engines by expanding profitability through investments in high value-added advanced materials such as semiconductors and secondary battery materials."