1. What Happened?: Kyungchang Industry’s H1 2025 Earnings Decline

Kyungchang Industry reported sales of KRW 184.3 billion, operating profit of KRW 2 billion, and a net loss of KRW 0.5 billion for the first half of 2025. Compared to the same period last year, sales decreased by 44.7%, operating profit fell by 42.4%, and the company swung to a net loss.

2. Why Did This Happen?: Declining Auto Parts Sales and Profitability

The primary driver of this earnings decline is the decrease in auto parts sales. A combination of factors, including a general downturn in the automotive market and rising raw material prices, contributed to the poor performance. While Q2 sales accounted for 52% of total H1 sales, indicating a concentration of performance in the second quarter, profitability improvements were insufficient.

3. What’s Next?: Increased Short-Term Uncertainty, Long-Term Growth Potential

In the short term, the continued decline in sales and securing liquidity are key risk factors. However, Kyungchang Industry is actively responding to the eco-friendly vehicle market by investing in EV motor foundry business and developing its own motor system. The company is also securing overseas customers to establish new growth engines. If these efforts bear fruit, there is still potential for growth in the medium to long term.

4. Investor Action Plan: Close Monitoring is Necessary

Investors should closely monitor future quarterly earnings releases for signs of sales recovery and progress in new businesses. The growth and profitability improvement in the eco-friendly vehicle sector, in particular, will be crucial indicators for investment decisions. It is important to be mindful of short-term stock price volatility and evaluate the company’s growth potential from a long-term perspective.