Songwon Industrial Group reports sales decrease for Q1 2014

Ulsan, Korea - May 15, 2014 - Songwon Industrial Group (www.songwon.com) today reported its audited results for Q1 achieving sales of 162,899 Mil. KRW. This is a -6.6% decrease versus the same period last year and a -3.6% slip compared to sales of the previous quarter. The result is mainly due to the unusual global economic situation driven by low economic activity combined with high volatility at the end of 2013. Customers were reducing inventories and were placing orders with shorter lead times than usually.

In Million KRW First quarter 2014 2013 ∆% Sales 162,899 174,344 -6.6% Gross profit 20,327 32,341 -37.1% Gross profit margin 12.5% 18.5% Operating profit -1,057 11,896 -108.9% EBIT* 2,712 18,622 -85.4% EBIT-margin 1.7% 10.7% Profit for the period -4,892 7,722 -163.4%

*EBIT is calculated as Operating profit + Other operating income – Other expenses

Overall, Songwon’s Q1 2014 sales continue to run steadily with only a few exceptions. Polymer Stabilizers sales increased by 517 metric tons (+2.9%) driven by Main AO’s & Blends, Light Stabilizers, Niche AO’s & Blends and Thioesters. On the other hand, due to the discontinuation of certain alkyl phenols and aminic AO‘s (non-core products), sales of these product groups decreased.

In Q1 2014, gross profit was 20,327 Mil. KRW – down -37.1% compared to Q1 2013 (32,341 Mil. KRW). In Q1 2014, the gross profit margin decreased from 18.5% to 12.5% in Q1 2014 as a result of lower overall sales volumes and lower sales prices (driven by competitive pressure for the Polymer Stabilizer business), higher raw material prices and lower plant utilization (lower costs absorption).

Commenting Hans-Peter Wüest, Chief Financial Officer and Member of the Songwon Industrial Group Executive Committee, said: “The economic environment remains challenging. However, based on predictions for gradual economic strengthening for Q2 2014 and the remainder of the year, we are optimistic about seeing improvements. Nevertheless, to address the challenges our businesses are facing, we have identified areas for further streamlining and improvement and these actions are starting to have a positive effect. Heading into the next quarter of 2014, order levels are much stronger than we saw in Q1 2014 and the current year-end outlook remains positive.”

The Q1 Report can be downloaded at: www.songwon.com/en/investors/financialresults.

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