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Photo = Yonhap news |
[Alpha Biz= Reporter Kim Sangjin] The financial results of major domestic cement companies have seen a decline in the third quarter of this year, as the construction industry, a key demand driver, continues to face difficulties. Experts suggest that a rebound in Q4 is unlikely due to the ongoing downturn in the construction sector.
According to a report from the Financial Supervisory Service on the 14th, major cement companies such as Hanil Cement, Asia Cement, Seongshin Cement, and Sampyo Cement saw declines in both sales and operating profit for the third quarter of 2023. Based on consolidated financial statements, Hanil Cement's sales decreased by 8.3%, from 424.5 billion KRW in Q3 2022 to 389.4 billion KRW this year. Asia Cement saw a 14.7% drop in sales, from 288.4 billion KRW to 246 billion KRW, while Sampyo Cement's sales fell by 4.5%, from 180.5 billion KRW to 172.3 billion KRW. Seongshin Cement, however, saw a slight 1.2% increase in sales, from 258.8 billion KRW to 261.8 billion KRW, although its operating profit declined.
In terms of operating profit, Seongshin Cement's profit decreased by 38.5%, from 10.4 billion KRW in Q3 2022 to 6.4 billion KRW in Q3 2023. Asia Cement's operating profit also dropped by 35.2%, from 43.8 billion KRW to 28.4 billion KRW during the same period. On a positive note, Hanil Cement and Sampyo Cement both saw slight increases in operating profit of 5.3% and 2.9%, respectively.
The ongoing slump in the construction industry, which is a key downstream sector for cement companies, suggests that a significant rebound in sales for the cement sector in the fourth quarter is unlikely. From January to August this year, the number of housing permits issued nationwide was only 200,000, significantly lower than the 429,000 units in the previous year, and this trend is expected to continue into the end of the year. Leading indicators such as construction orders are also showing negative trends. Despite government efforts to stimulate the economy with various policies, market sentiment remains cautious due to issues like large-scale real estate project financing (PF) defaults, making a recovery difficult to expect. Since the construction industry is the primary downstream sector for cement, a continued downturn in construction will likely result in lower cement production and shipments.
The Korea Cement Association, in its "2024 Cement Supply and Demand Outlook" released on the 24th of last month, projected that domestic cement shipments this year would total 44 million tons, marking a 12.4% decrease compared to 50.24 million tons last year. The association cited poor shipment performance in the first three quarters of this year as a key factor contributing to the decline, with cumulative shipments for Q3 amounting to 32.22 million tons, a 12.8% decrease from 36.96 million tons during the same period in 2022.
Alphabiz Reporter Kim SangJin(letyou@alphabiz.co.kr)
