Kumho Petrochemical : 2020 2Q Earnings Release

Aug 7, 2020

2Q 2020 Earnings Release

The business result for the 2nd quarter of 2020 is currently under the audit process, however this is

presented purely for the purposes of investors' convenience.

Hence, please be advised that some of the contents may be altered in the course of audit.

Forecasts and projections contained in this material are based on current business environments and management strategies, so these may differ from the actual result upon changes and unaccounted variables.

1. 2Q 2020 Business Results
2. Divisional Results
3. Appendix

2Q 2020 Business Results

Income Statements

					(Unit: KRW bn)
Classification	20.2Q	20.1Q	QoQ	19.2Q		YoY
Sales	1,026.2	1,225.5	-16.3%	1,292.8		-20.6%
Operating Profit	120.1	133.1	-9.8%	138.1		-13.0%
(11.7%)	(10.9%)	(10.7%)
EBITDA	169.0	182.1	-7.2%	186.5		-9.4%
(16.5%)	(14.9%)
		(14.4%)
Pre-tax Income	126.6	139.0	-8.9%	149.7		-15.4%
	(12.3%)	(11.3%)		(11.6%)
Net Income	99.8	127.5	-21.7%	115.2		-13.4%
	(9.7%)	(10.4%)		(8.9%)
Equity Income	10.1	9.5	6.7%	10.4		-2.9%

* Net Income is based on Controlling interests.

• Since the business related with Electronic Chemicals has been disposed in 20.1Q, it is classified as discontinued operations, and the financials of same term of last year have been rewritten.

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2Q 2020 Business Results

Balance Sheet

(Unit: KRW bn)

Classification	20.2Q	19	Change
(End)
Asset	4,667.2	4,538.0	2.8%
(Cash and	(491.3)	(127.8)	(284.4%)
equivalents)
Liabilities	1,897.7	1,908.4	-0.6%
(Debt)	(1,186.2)	(1,104.0)	(7.4%)
Shareholder's	2,769.5	2,629.6	5.3%
Equity
Liabilities/	68.5%	72.6%	-4.1%p
Equity (%)

Financial Ratios

Classification	20.2Q	19	Change
(End)
Debt/Equity	42.8 %	42.0%	0.8%p
Net Debt	25.1%	37.1%	-12.0%p
/Equity
Interest
Coverage	16.3	8.4	7.9
Ratio (x)
ROE	16.8%	11.8%	5.0%p
ROA	9.9%	6.4%	3.4%p

2

Divisional Results & Outlook

Synthetic

Rubbers

36.1%

of total sales

2Q Earnings Review

• Reduction in sales volume and revenue caused by reduced utilization rate of tire companies and weak demand due to COVID19.
• Secure profitability of NB Latex by increasing demand for hygiene products.

3Q Outlook

• BD: The price is forecasted to be rebound due to
  high usage of light feed cracking and reduced supply in the region.
• Demand recovery is expected due to restart of tire companies.

Sales (Unit: KRW bn)

499.9

485.8

469.3

455.2

369.9

19.2Q

19.3Q

19.4Q

20.1Q

20.2Q

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Divisional Results & Outlook

Synthetic

Resins

24.4%

of total sales

2Q Earnings Review

• Maintain profitability due to strong demand for food packaging/disposable PS and ABS for home appliances.

3Q Outlook

• SM: Despite strong demand, the price is forecasted to be strong due to reduced operations in the region.
• Expected to see an increase in selling prices and profitability caused by the improved demand in automotive/home appliance market.

Sales (Unit: KRW bn)

311.6

292.1

285.7

276.2

250.5

19.2Q

19.3Q

19.4Q

20.1Q

20.2Q

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Divisional Results & Outlook

Others

39.5%

of total sales

2Q Earnings Review

• Phenol derivatives: Improvement in profitability due to strong spreads of main products.
• Energy: Decline in sales and profitability caused by a drop in the electricity price (SMP) and annual shutdown.

3Q Outlook

• Phenol derivatives: The product price is forecasted to be weak by increasing phenol supply and easing acetone supply in the region.
• Energy: Sales and profitability will be improved after maintenance.

Sales (Unit: KRW bn)

481.3

		454.3	470.5
55.4	442.1
	45.2
36.5	61.5	59.4	405.8
	48.4	Others
			46.2
31.5		46.9
41.3	30.2
		Energy
		28.8	33.6
	32.5	17.0	Specialty Chemicals
				Phenol
				Derivatives
357.9			346.7
		319.2
	306.8	309.0

19.2Q

19.3Q

19.4Q

20.1Q

20.2Q

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APPENDIX

Quarterly Performance

(Unit: KRW bn)

			2019					2020
Classification
	1Q	2Q	3Q	4Q	Total	1Q	2Q	3Q	4Q	Total
Sales	1,270.7	1,292.8	1,220.0	1,185.7	4,969.2	1,225.5	1,026.2			2,251.7
Operating	143.5	138.1	68.7	15.9	366.2	133.1	120.1			253.2
Profit
Net
Interest	14.7	15.2	15.3	3.8	49.0	13.0	6.4			19.4
Expense
Equity	10.2	10.4	11.3	7.1	39.0	9.5	10.1			19.6
Income
Pre-tax	142.8	149.7	68.8	16.6	377.8	139.0	126.6			265.6
Income
Net	113.9	115.2	47.6	17.9	294.6	127.5	99.8			227.3
Income

• Net Income is based on Controlling interests.
• Since the business related with Electronic Chemicals has been disposed in 20.1Q, it is classified as discontinued operations, and the financials of same term of last year have been rewritten.

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APPENDIX

Production Capacity (KKPC)

Classification		Product	Capa	Unit	Note
			SBR	256,000
	B		HBR	290,000
	R		LBR	48,000
		S-SBR	63,000
			NdBR	60,000
Synthetic			NBR	87,000	MT/Y
Rubbers			HSR	10,000
		NB Latex	580,000		Completion of Expansion
			60,000MT/Y, 2H, '20
		SB Latex	82,800
			SBS	93,000		Completion of Expansion
				45,000MT/Y, 2H, '20
			Total	1,569,800
			PS	239,000
			ABS	250,000
Synthetic
	SAN/Pwd	181,000	MT/Y
Resins			EPS	80,000
			PPG	144,000
			Total	894,000
Specialty	Antioxidants	83,900	MT/Y	Completion of Expansion
Chemicals	4,900MT/Y, 1H, '20
Energy		Steam	1,710	T/H
	Electricity	300	MWH
			Ulsan	90,000
BD			Yeosu	147,000	MT/Y
			Total	237,000			7

APPENDIX

Production Capacity (Affiliates)

Classification	Product	Capa	Unit	Note
	Phenol	680,000
	Acetone	420,000		Completion of AR(Acetone recycle) Expansion
		56,000MT/Y, 1Q, '21
Kumho	MIBK	60,000
Cumene	900,000
P&B	MT/Y
BPA	450,000
Chemicals
			Completion of Expansion 45,000MT/Y, 2Q, '19
	Epoxy Resin	207,000		Completion of LER(III) Revamping
				20,000MT/Y, 3Q, '21
	Total	2,717,000
Kumho	MDI	410,000		Completion of Expansion
	60,000MT/Y, 2H, '19
Mitsui			MT/Y
Aniline	20,000
Chemicals
Total	430,000
Kumho	EP(D)M	220,000
TPV/KEPA	12,000	MT/Y
Polychem
Total	232,000

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APPENDIX

Sales Breakdown & Export Share by Region

	Synthetic Rubbers
Domestic	Export
13%	87%

S.E.Asia	55%
China	23%
America	7%
Europe	7%
S.W.Asia	6%
Others	2%

			Synthetic Resins
		Domestic			Export
		35%			65%

China	41%
Africa	16%
S.W.Asia	12%
S.E.Asia	12%
Europe	12%
America	7%

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APPENDIX

Investment Shares & Asset available for sale

Asset available for sale

Asiana Airlines	11.0%
Daewoo E&C	3.4%
KDB Life Insurance	0.4%

Major

Shareholder

24.8%

KKPC

Treasury

Stock

18.4%

Investments in Affiliates

Kumho P&B Chemicals	100.0%
Kumho Mitsui Chemicals	50.0%
Kumho Polychem	50.0%
Kumho Terminal & Logistics	100.0%
Korea Energy Power Plants	96.1%

• As of 30th June, 2020. based on common shares

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