Operating Profits Were Above KRW 50 Billion for 2 Consecutive Quarters

● Operating profits grew 12% from 3Q of last year; the share of high value products was increased to counteract rising costs.

● Fundamentals such as the company’s lower debt ratio and its upgraded credit rating are showing steady improvements compared to the end of last year.

SKC(CEO Lee Wan Jae) posted robust earnings growth and recorded an operating profit of 50 billion units for two consecutive quarters this year. Despite rising raw material prices and worsening business environment, the company has gradually increased its production of specialty products and accelerated profound changes towards the vision of becoming a ‘Global Specialty Marketer.’

On October 24, during the 3rd Quarter 2018 Earnings Presentation held at the SK Securities HQ in Yeouido, SKC announced that it posted sales of KRW 689.4 billion and operating profits of KRW 54 billion. Operating profit increased 12% compared to the same period last year.

Overall, the specialty materials business and the new growth business, both of which will lead future company growth, are beginning to show steady growth on the basis of healthy earnings from the chemical business.

The chemical business achieved sales of KRW 228.6 billion and operating profit of KRW 39.7 billion. SKC has been continuously increasing the supply of high-value PG (propylene glycol) that uses PO (propylene oxide) as the raw ingredient. In August, SKC completed the construction of its 11th polyurethane system house in India. This was part of its business structure innovation that will focus more on downstream products.

The industrial materials business recorded KRW 266.7 billion in sales and KRW 1.6 billion in operating profit. In spite of the surge in raw material prices, the company is expanding sales of high value-added products like ultrahigh-shrink film, release film for MLCC, and anti-shatter film. This year, the company is expanding its lineup of eco-friendly products with high social values. For example, in the first half of the year, SKC launched Eco Label[1] in the North American market, and in the second half of the year, it expanded its biodegradable film[2] customer _ base_.

SKC’s growth business recorded sales of KRW 194.1 billion and operating profits of KRW 12.7 billion. After certification of its CMP pad product, which is a semiconductor wafer abrasive, the company has been increasing its supply of CMP pads to customers. Overall, the company’s operating profits remained at about the same level as the same period last year, as sales and profits of beauty/health care materials increased.

SKC has been improving its financial structure. For example, it has reduced its debt-to-equity ratio. SKC's credit rating improved to A+ in June, and its public bond offering in the 2018 3Q was very successful. An SKC representative said, "We shall continue to push our growth by expanding our portfolio of high-value specialty products. Despite recent global market conditions, we will do our best to enhance shareholder value by raising dividends in line with profit growth this year."

[Footnote 1] SKC Eco Label

-  Made from the same material as a PET bottle, the SKC Eco Label is an environment-friendly label that can be recycled after washing off the packaging prints.

- Recycling process de_ script_ion: https://www.youtube.com/watch?v=FpwcSVCeMDo

[Footnote 2] Biodegradable Film

- This is a film whose raw material is made from plant-derived resin. It is an eco-friendly film that gets completely biodegraded in a short period of time if it is buried in the soil after use.

- In 2009, SKC succeeded in commercializing the film for the first time in the world when it was developed as an eco-friendly food packaging film.