South Korea: Cement Industry's Performance Soars, But Challenges Await in This Year's Management
After enjoying robust performance last year due to cement price increases, the domestic cement industry in South Korea faces potential performance difficulties this year amid a real estate market downturn.
The South Korean cement industry, which saw an impressive performance last year due to an increase in cement prices, is now facing potential challenges in 2023 due to the downturn in the real estate market. Apartment construction records, a critical indicator of industry health, have plummeted to the lowest levels ever recorded. In addition to the reduced construction activity, the industry is bracing for increased expenses related to manufacturing costs and environmental regulations.
On March 19, according to the Financial Supervisory Service's electronic disclosure system, Hanil Cement reported a 21% increase in revenue to 1.8 trillion won in the previous year from 1.4876 trillion won, with operating profits more than doubling to 246.6 billion won from 118 billion won. Other companies, such as Asia Cement and Ssangyong C&E, also reported significant gains in revenue and operating profits, indicating a robust performance across the sector. However, the industry also faced cost pressures from construction slowdowns and rising costs for coal and other inputs.
Despite these strong performances, the outlook for 2023 remains uncertain. The construction industry, a significant consumer of cement, is highly sensitive to economic shifts, and the current downturn could impact cement demand. Additionally, increased costs for electricity, transportation, and investments in equipment to meet carbon neutrality and environmental regulations are expected to place further strain on the industry's operations.
