● Operating profit exceeds KRW 50 million after 11 quarters as sales in the second quarter rose 18% to KRW 726 billion

● Operating profit is expected to grow until the goals set in the beginning of 2018 are reached

SKC’s (CEO Lee Wanjae) sales and operating profit rose 18% and 20.1% to KRW 726 billion and KRW 53.1 billion, respectively, in the second quarter of 2018. It has been 3 years since the company last posted an operating profit of over KRW 50 billion since the third quarter of 2015.

SKC announced its second-quarter performance on 6, 2018 at the main office of SK Securities in Yeouido with the attendance of its directors including the following: Won Gidon, Chief Operating Officer&President of Chemical Biz. Division; Lee Yongseon, President of Industrial Materials; Oh Junrok, New Biz. division Vice President; Pi Seonghyeon, Manager of Business Supporting Division
; and Roh Yeongju, Vice president/Officer of Value Creation Office.

Sales of KRW 229.3 billion and operating profit of KRW 40.7 billion posted in the chemical business thanks to improved high value-added downstream business

The chemical business division posted sales of KRW 229.3 billion and operating profit of KRW 40.7 billion. Such increase in both sales and operating profit is attributed to the improved high value-added downstream business and PO productivity, which was maximized thanks to competitors in regular maintenance among other favorable market conditions.

The PO supply environment will have less favorable impact in the third quarter since there will be fewer competitors performing regular maintenance. SKC will make more effort to ensure sustainable profitability by increasing the sales of high value-added downstream products and reducing production costs at the same time.

Sales of KRW 290.5 billion and operating profit of KRW 2 billion from the film business, which is now in the black thanks to increased sales of specialty products

The Industrial Material Division is now in the black, having recorded sales of KRW 290.5 billion and operating profit of KRW 2 billion. This is largely due to the increased sales of MLCC release film, shatter-proof film, and other functional and specialty materials. Note, however, that there has been a significant increase in sales and profit because of increased raw material costs and stagnant downstream industries.

The business division is expected to post better performance in the third quarter because there is high demand for heat-shrinkable and smartphone films at this time of the year. SKC has been using an eco-label on its products in keeping with the environment-friendly trends, and it is now developing environment-friendly food packages made of biodegradable film. SKC is also ready to sell an upgraded version of the TAC film for LCD, now that the new alternative TAC film has been certified. There is a positive outlook for the business division in terms of business performance because the performance of SKC Hi-Tech & Marketing has been improving since it became a subsidiary of SKC after the company tendered 100% of the shares last year.

With sales of KRW 206.2 billion and operating profit of KRW 10.4 billion from the growth business, the company is now fully ready to launch semiconductor materials from the third quarter

​The Growth Business Division recorded sales of KRW 206.2 billion and operating profit of KRW 10.4 billion. In particular, its operating profit has increased from the first quarter as the sales of semiconductor materials rose and the off-season for telecommunications devices ended.

The business division is likely to maintain the growth momentum in the third quarter. SKC will start the mass production of CMP pads, which are used as abrasive for semiconductor wafers; SKC Solmics will complete the construction of new production facilities for semiconductor parts. SK Bioland has also recently completed the construction of its third-generation mask pack factory in China, and it is ready for full production.

SKC decided to expand its semiconductor materials and parts business and identify new items in addition to ceramic materials/parts, CMP, semiconductor chemicals, and back-end processing materials/parts. The company’s goal is to post KRW 1 trillion in sales in the semiconductor industry alone by 2021.

SKC’s credit rating becomes A+ again for the first time since 1997
​As a result of its business performance in the second quarter, SKC posted a debt-to-equity ratio of 127.3%, which is 1.1%p lower than that of the first quarter. Its reliance on borrowings has also eased, decreasing 0.5%p to 38.4%. As a result, credit rating agencies have changed SKC's credit rating to A+ in June 2018. SKC received a credit rating of A+ for the first time since it was listed in 1997.

"We will maintain the growth momentum by increasing the ratio of specialty products and making efforts in global business expansion beginning with China. I think we can record operating profits of KRW 200-220 billion, which was the goal we set early this year," said Roh Yeongju, Director of the Value & Innovation Support Division. [End]

(Unit: KRW 100 million, %)	18.2Q	17.2Q	18.1Q	YoY	QoQ
Sales	7,260	6,152	6,387	+18.0%	+13.7%
Operating Profit	531	442	412	+20.1%	+28.9%
Equity Income	192	72	306	+166.7%	△37.3%
PBT	535	671*	585	△20.3%	△8.5%

<Performance of SKC in the second quarter of 2018 (_ base_d on relationship)> *Including the KRW 24.2 billion difference resulting from the r_ eval_uation of SKC Hi-Tech & Marketing

(Unit: KRW 100 million)	18.2Q		17.2Q		18.1Q
	Sales	Operating Profit	Sales	Operating Profit	Sales	Operating Profit
Chemicals	2,293	407	1,919	329	2,102	368
Industrial Materials	2,905	20	2,214	25	2,735	△40
Growth Business	2,062	104	2,019	88	1,550	84

<Performance of SKC by area in the second quarter of 2018 (_ base_d on relationship)>