KOLON Industries to see the effect of super fiber 'Aramid'?

[Korea Financial Times, Gwak Horyung] Attention is focusing on whether Kolon Industries(President Kim Youngbum), which has completed investment in expanding its new business and reorganizing its business, will be able to succeed in the performance turnaround.



According to the industry on the 30th, Kolon Industries will complete the expansion of the aramid pulp production line at its Gumi plant within the year. Through this, its annual production capacity of pulp will increase from 1,500 tons to 3,000 tons. At the end of December last year, the company also 'doubled up' its aramid production capacity from 7,500 tons to 15,000 tons per year. This means that the large-scale aramid investment project, which started in 2021 to grow new growth engines, will be completed.
However, the aramid effect is expected to begin in earnest after the fourth quarter. This is because there is no problem with the operation of the new plant in the third quarter, but regular maintenance of existing production facilities is underway.


Aramid is a new material that is five times stronger than steel and can withstand high temperatures of 500 degrees Celsius. It is attracting attention as an alternative material in high-tech industries such as electric vehicles, optical cables, and aerospace. Aramid pulp is a product made by cutting aramid yarns into shavings, which are used to reinforce automobile parts.

Kolon Industries focuses on tire cord, petroleum resin, and fashion. Last year, sales and operating profit fell 6 percent and 35 percent, respectively, from the previous year due to the sluggish industry. Its operating profit in the first half of this year was only KRW 90 billion, down 20 percent from last year. Aramid's contribution to the company's earnings is urgently needed to turn things around.


The restructuring of underperforming businesses is also expected. The company began a full-scale restructuring of its unprofitable PET film business earlier this month. Kolon Industries plans to organize its business by establishing a joint venture with SK Microworks, which was acquired from SKC by private equity fund Hahn & Company. Kolon Industries will hold an 18 percent stake in the joint venture in exchange for an in-kind contribution of its Gimcheon PET film plant.

The film and electronic materials division, which includes Kolon Industries' film division, has posted an operating loss of KRW 15 billion in the first half of this year, following losses of about KRW 157 billion in 2022 and 2023. As Kolon Industries has a small stake in the joint venture, its results will not be reflected in the future.

Gwak Horyung (horr@fntimes.com)