1. Namhae Chemical H1 2025 Performance Overview
Namhae Chemical achieved sales of KRW 863.9 billion and operating profit of KRW 34.9 billion in H1 2025, maintaining a solid growth trajectory. The fertilizer segment, with a 42% domestic market share, generated stable profits, while the oil business contributed positively with increased sales volume.
2. Key Business Performance and Challenges
Fertilizer Segment: Steady Growth, but Raw Material Prices Remain a Concern
The fertilizer segment remains Namhae Chemical’s core business, underpinning its solid performance. However, rising prices of key raw materials like urea, potassium chloride, and sulfur could pressure margins and require ongoing monitoring.
Oil Business: Sales Volume Growth Drives Stable Profitability
The oil business saw sales grow by 8.8% year-on-year, driven by increased sales volume, positively impacting overall performance. Volatility in international oil prices requires continued observation.
Semiconductor-Grade Sulfuric Acid: Initial Investment Burden, Future Growth Driver
The new semiconductor-grade sulfuric acid business is currently operating at a loss due to initial investment and operating costs. However, it holds potential for future profitability with anticipated growth in the semiconductor industry.
3. Investment Considerations
- Raw Material Price Volatility: Fluctuations in international raw material prices, particularly sulfur, could negatively impact profitability.
- Exchange Rate Fluctuations: USD exchange rate volatility can introduce variability in profits.
- New Business Profitability: The initial losses from the semiconductor-grade sulfuric acid venture pose a burden on consolidated earnings.
4. Action Plan for Investors
- In the short term, monitor the slowdown trend observed in Q2 earnings.
- In the medium to long term, closely monitor raw material price fluctuations, the turnaround of the new business, and changes in the macroeconomic environment.
- Develop an investment strategy by comprehensively considering Namhae Chemical’s business portfolio diversification strategy and future growth potential.