Kolon Industries (120110.KS) more than doubled its first-half operating profit and is now broadening its growth base with high-value materials for artificial intelligence servers and foldable devices. Profitability recovered in existing businesses such as petroleum resin and tire cord, while newly expanded electronic materials capacity is expected to join as a fresh growth driver from the second half.
Kolon Industries posted consolidated first-half revenue of 2.5939 trillion won and operating profit of 160.7 billion won, according to filings with the Financial Supervisory Service's DART disclosure system on the 13th. Revenue rose 4.2% and operating profit jumped 122.4% from a year earlier. The operating margin widened to 6.2% from 2.9%. Operating profit climbed 130.1% in the first quarter and 118.0% in the second quarter from the same periods a year earlier. Net profit rose 198.2% to 145.7 billion won.
The chemical materials division led the improvement. First-half revenue reached 783.9 billion won, up 20.4% from a year earlier, while operating profit grew 92.2% to 113.7 billion won from 59.1 billion won. Of the company's 88.5 billion won increase in operating profit, 54.6 billion won, or 61.7%, came from chemical materials. Industrial materials revenue slipped 2.1% to 1.1763 trillion won, but operating profit more than doubled to 42.1 billion won from 20.4 billion won. The fashion segment's operating profit rose to 19.1 billion won from 6.8 billion won.
Profitability gains were most pronounced in petroleum resin, helped by operational streamlining and inventory sales. With product prices rising, inventory secured at relatively lower costs was sold, producing a lagging effect that lifted margins. Sales of high-value tire reinforcement materials increased, and aramid, a high-strength fiber, returned to positive earnings before interest, taxes, depreciation and amortization after the company began selling its entire production volume from April.
The operational efficiency, or OE, and AI transformation, or AX, initiatives that CEO Huh Sung has emphasized since taking office last year are also cited as reasons for the improved profitability. Despite difficulties from oversupply out of China, utilization rates rose sharply thanks to OE gains that reduced process inefficiencies. "The chemical division introduced AI-based process control to improve quality stability, and we applied AI video monitoring at major plants to expand automation in safety management, maximizing efficiency," a Kolon Industries official said.
Foldable materials are seen as the next growth pillar. Utilization of colorless polyimide, or CPI, a core material for foldable devices, is climbing on the back of an expanding overseas customer base. Kolon Industries has also begun trial production at a new facility for modified polyphenylene oxide, or mPPO, used in copper clad laminates for AI servers, and plans to raise utilization by year-end. The company expects combined annual sales from the two facilities to reach as much as 400 billion won once they operate at full scale.
The outlook for its materials portfolio is also brightening. The April merger with Kolon ENP, which combined research and development, procurement and production networks for engineering plastics, is expected to deliver benefits. In July, the company completed an expansion of a polyurethane artificial leather production line at its Gimcheon plant in North Gyeongsang Province, backed by a 24.1 billion won investment. From August, it also began commercial supply of low-carbon polyacetal products made with renewable-energy-based feedstock.
Shinhan Investment Securities said the earnings recovery is widening toward AI infrastructure and foldable materials. The brokerage forecast Kolon Industries' operating profit will reach 304.2 billion won this year, up 179.4% from last year, and rise a further 18.2% to 359.5 billion won next year. "For tire cord, an expanding lineup of high-value products and added capacity in Vietnam are supporting profitability, while for aramid it is higher utilization," said Lee Jin-myung, an analyst at Shinhan. "From the second half, the mPPO expansion and wider CPI sales will join as new growth drivers."
