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-1-
www.ikolon.com
March 07, 2011
KOLON Industries, Inc.
-2-
Company Overview
1. Performance Results
2. Major Products
- Industrial Materials
- Chemical
- Films/Electronic Materials
- Fashion
3. Changing KOLON
4. Divisional Mid-term Strategies
-3-
51
48
-419
66
82
-6
52 62
61
1. Performance Results
※ KOLON Industries acquired FnC KOLON, now a part of its Fashion division, on August 1, 2009
(Wbn)
① Sales Breakdown
509
405
287 436
578
Industrial Materials Chemical Films Others ※Fashion
672
501
702561
806
413 522
448607
Sales
2008 2009 2010
-9
36
33
65
26%
31%23%
21%
52%
27%
29%
20%
26%
23%
13%
18%
17%
25%
21%
22%
15%
25%
24%33%
21%Operating
Profits
37%
28%
27%
11%
1,990 2,215 3,241
125 180 251
-4-
■ Sales and Operating Profits ■ Pre-tax Profits
1. Performance Results ② Overview of 4Q (Net) ‟10 Results
(Wbn)(Wbn)
716.1
732.1804.0
777.4
927.7
48.7
44.7
63.6
71.1 71.9
200.0
400.0
600.0
800.0
1,000.0
4Q '09 1Q '10 2Q '10 3Q '10 4Q '10
Sales
OP
14.3
37.6
66.5 66.0
58.6
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
4Q '09 1Q '10 2Q '10 3Q '10 4Q '10
Sales increased 30% (YoY) and 19% (QoQ) on the effects of
capacity expansion and the business recovery.
Operating profit increased 48% (YoY) due to expansion of
high value-added line, overall industry growth, and P-Mix
improvements, however there is no significant difference (QoQ)
due to raw material price increases (TPA/EG, Naphtha) and
bonus payments.
1Q ‟11 earnings are forecast to match that of 4Q „10 on
the back of a decrease in one-off expenses, despite raw
material price increases (TPA/EG, Naphtha) and the strong
Korean won.
Pre-tax income increased 310% (YoY) on the back of an
increase in OP and the steadily improving performance
of the subsidiaries, but decreased 11% (QoQ) due to
one-off expenses, such as bonus payments of the subsidiaries
in 4Q ‘10.
Pre-tax income is forecast to increase slightly on the back of
ongoing OP in 1Q ‘11 and a decrease in one-off expense of
the subsidiaries.
-5-
2-1. Major Products - Industrial Materials
Product Applications Customers Competitors
Tire Cord Tires Goodyear, Bridgestone, Michelin,
Continental, Kumho, Hankook
Hyosung
Car airbag
(fabric)
Automobiles Hyundai Mobis, Autoliv,
KSS, S&T Daewoo Ind.
Technical Yarn Automobiles Seatbelt, Tarpaulin and
Conveyer belt makers
Hyosung
Aramid Bulletproof weaves,
Automobiles, Cables
Car brake, Gasket and MRG makers
Defense industry / Optical fiber cable
Dupont, Teijin
① Overview
Inner liner
Carcass
Belt
Capply
(Nylon, Aramid)
(Rubber)
(Steel)
Sales (Wbn)
446476
522
436
561
2006 2007 2008 2009 2010
• Tire cord- Global top 3 with 13% market share - Strong brand recognition in the tire industry
• Airbags, Seatbelts and PET Spunbonds- Airbags : 85% market share in Korea.- Seatbelts : 60% market share in Korea - PET Spunbonds : 60% market share in Korea
* Expansion in China - Tire cord/Airbag plant (2004)
• Aramid - Launch of Aramid business in 2005 (4Q)- Aramid plant was expanded in Jan. 2010
• Chamude- Third largest production capacity in the world- Gateway into high-end markets
* Watch cases, Cloth linings for bags* Car seat covers
9.6% 9.7% 12.5% 15.1% 11.1%
OP Margin
-6-
Sales continued to increase on the back of growing demand for automobile materials and the increasing
utilization ratio of aramid.
OP decreased temporarily due to rising raw material price (TPA/EG), the strong Korean won, and bonus payments,
despite the sales increase.
☞ 1Q „11 sales are expected to decrease slightly during the off-peak season of the automobile
industry, but OP is expected to increase slightly due to a decrease in one-off expense.
② 4Q (Net) ‟10 Results2-1. Major Products - Industrial Materials
■ Sales (Wbn) ■ Operating Profit (Wbn)
120.3 124.2
137.6 142.4
156.3
4Q'09 1Q'10 2Q'10 3Q'10 4Q'10
14.4 12.4
15.5
18.6
15.8
11.9%
10.0%
11.3%
13.1%
10.1%
4Q'09 1Q'10 2Q'10 3Q'10 4Q'10
OP
OP Margin
-7-
2-2. Major Products - Chemical
Product Applications Customers Competitors
Hydrocarbon
ResinsAdhesives,Paint, Tires,Hot-melt road marking
Henkel, Bostik, H.B.Fuller, 3M,DaeHwa Paint
Exxon, Eastman
Phenol &
Electronic
Epoxy Resins
Electronic materials,
Automotive industry,
Tires, Paint
Antech, Hempel,
Shinsai Shokai,
Hyosung, Hankook Tire,
Eko International
Kangnam Chem,
Kukdo Chem,
※ KOLON Industries acquired KOLON Chemical,
now a part of its chemical division, on June 1, 2007
• Hydrocarbon Resins
- Capa. : 100,000MT/Year (Domestic 70%, Export 30%)
<Except for by-product : Domestic 30%, Export 70%>
• Phenolic Resins
- Capa. : 60,000MT/Year (Domestic 55%, Export 45%)
- Launch of epoxy resins in Dec. 2007(12,000MT/Year)
• GRP Pipe
- Capa. : 3,000MT/Year (Domestic 100%)
- Launch of GRP pipe in Dec. 2007
Hydrocarbon
Resin
Phenolic
Resin
Glass
Reinforced
Plastic
Pipe
Epoxy
Resin
① Overview
Sales (Wbn)
479 504607 578
806
2006 2007 2008 2009 2010
5.7% 5.9% 5.9% 8.4% 7.6%
OP Margin
218
286
-8-
Sales continued to grow on the back of the selling price due to rising naphtha prices and of the increased
by-product, despite regular overhaul.
OP decreased slightly due to bonus payments although price spread improvements were implemented in 4Q ‘10.
☞ OP is forecast to increase through epoxy expansion and ongoing price spread
improvements in 1Q „11.
2-2. Major Products - Chemical ② 4Q (Net) ‟10 Results
■ Sales ■ Operating Profit (Wbn)(Wbn)
141.3
192.3 201.5 203.6 208.7
4Q'09 1Q'10 2Q'10 3Q'10 4Q'10
9.2
12.1
16.2
18.4
14.2
6.5% 6.3%
8.0%
9.0%
6.8%
4Q'09 1Q'10 2Q'10 3Q'10 4Q'10
OP
OP Margin
-9-
2-3. Major Products - Films/Electronic Materials ① Overview
Film Product Applications Customers Competitors
Base
Film
Packing
FilmFood packing
Shrinkable filmYoulchon Chem. SKC, TAMK
Optical
Film
DFR, LDF, Prism
Reflection film
Release film
Solar protect film
Shinwha, SBK, LGE, LGC,
LMS, Keiwa, MN-tech
NittoDenko, SKC-Haas,Tohcello
Toyo Aluminum, Krempel, Coveme
SKC, TAMK
IT
materials
DFRPCB, PDP
Semiconductors
3M, SEMCO, Daeduck Elec,
LGE, Anam Semicon,
Samsung Techwin, Samsung SDI
Asahi, Hitachi
Prism, etc TFT-LCD LGD, SEC MN-tech
• World-class technology and production capacity
* PET film: 5th in the world (production capacity)
* Nylon film: 3rd in the world
• Investment focused on value-added films for IT industry
* From DFR film to films for LCDs, PDPs and semiconductors
• Launch of optical thick film
- Optical thick film launched in June. 2006
- 1 line was expanded in Nov. 2009
Sales (Wbn)
316375
448509
672
2006 2007 2008 2009 2010
-1.9% 3.3% 7.4% 10.0% 12.2%
OP Margin
-10-
Sales increased (QoQ) on the back of strong sales of high value-added products, such as solar and touch screen,
and of the sales increase of high value-added packaging films, despite a LCD sales decline.
OP achieved an excellent margin by maintaining the selling price of LCD and due to the sales increase of
high value-added films (for solar, touch screen and packaging uses), despite bonus payments.
☞ Sales and OP are forecast to increase slightly in 1Q „11 on the back of recovering LCD demand and
P-Mix improvement.
2-3. Major Products - Films/Electronic Materials ② 4Q (Net) ‟10 Results
■ Sales ■ Operating Profit (Wbn)(Wbn)
138.8 147.2
168.0 179.3 177.7
4Q'09 1Q'10 2Q'10 3Q'10 4Q'10
12.5
13.4
19.4
24.6 24.8
9.0%9.1%
11.5%
13.7% 14.0%
4Q'09 1Q'10 2Q'10 3Q'10 4Q'10
OP
OP Margin
-11-
2-4. Major Products - Fashion ① Overview
Brand Segment Competitors
Outdoor
& Sports
KOLON Sport OutdoorThe North Face, K2, Columbia,
Black Yak
Head Sports Fila, EXR, K-Swiss, Puma
Golf
& Casual
Elord Golf Wolsey, Daks, Bean Pole-golf, Superior, Renoma, Munsingwear
Henry Cotton‟s TD casual Hazzys, Bean Pole, Lacoste, Club Monaco, Ben Sherman, CP
DistributionActiv
Distribution
(Home shopping) -
Luxury brands -
• Leading fashion company
* Well balanced brand portfolio
* Various distribution channels
- Dept., Disc., Agency, Direct, Outlet
• Focused on “Sports”
* Outdoor & Sports has shown consistent high growth
(averaged 19% YoY)
* Sales from KOLON Sport, Head, and Jack Nicklaus
Acc.ount for more than 60% of total sales
Sales (Wbn)
365430
477
599
702
2006 2007 2008 2009 2010
8.1% 8.9% 7.6% 6.6% 7.4%
OP Margin
312
287
-12-
Sales increased 22.4% (YoY) due to the peak seasonal demand and the cold weather.
OP increased by a large margin due to the sales increase of high value-added products, such as Out-Door products,
despite bonus payments.
☞ Sales and OP increased temporarily during the peak season in 4Q „10, however they are forecast to decrease
in 1Q ‟11 due to off-peak seasonal demand.
■ Operating Profit■ Sales
2-4. Major Products - Fashion ② 4Q (Net) ‟10 Results
(Wbn)(Wbn)
205.6
148.8
175.1
126.1
251.6
4Q'09 1Q'10 2Q'10 3Q'10 4Q'10
14.5
9.4
14.4
8.9
19.0
7.1% 6.3%
8.2%
7.1% 7.6%
4Q'09 1Q'10 2Q'10 3Q'10 4Q'10
OP
OP Margin
-13-
① Earnings: J-Curve3. Changing KOLON
‟02 ‟03 ‟04 ‟05 ‟06 ‟07 ‟08
1) Opposition of
labor union;
Restructuring
delayed
3) Deterioration in
the film market
‟09
2) Investments in
new businesses
(Aramid, PI film,
Thick film, IT materials, etc.)
9) Switching to a
holding company
8) Merger with
FnC KOLON
6) Refine business structure
(spin-off of fiber biz, high value-
added film biz
7) New businesses
contributing to earnings
(aramid, IT materials)
5) Merger with
KOLON Chemical
4) Stabilization
of relations btw
labor and
management
Jumping up to global material company,
Korea’s first fashion company.
‟10
10) implementation
of right issue for
securing future
growth
‟11
11) Merger with
Cambridge KOLON
-14-
1,081
33.8 101
1,486
70.3 160.9
1,990
125.2 216.6
2,215
179.9 282.9
3,241
251.3382.5
2006 2007 2008 2009 2010
Sales
OP
EBITDA
② Earnings trend3. Changing KOLON
CAGR
31.6%
39.5%
65.1%
-15-
③ Non-operating Gains & Losses trend3. Changing KOLON
■ Net Interest Cost ■ Net equity method gains ■ Net FX gains(Wbn) (Wbn) (Wbn)
(Wbn) OP continued to increase quarter by quarter
and steady pre-tax profit achieved from strong
performance of subsidiaries, but OP slightly
decreased due to the one-off expenses of the
subsidiaries in 4Q ‘10.
1Q ‘11 is expected to see an increase in equity
method profit due to a decrease in one-off
expenses, despite the weakening performance
of the subsidiaries (during the off-peak season
of the automobile and fashion industries).
(Wbn) 4Q ‘09 2009 1Q „10 2Q „10 3Q „10 4Q „10 2010
OP 48.7 179.9 44.7 63.6 71.1 71.9 251.3
Interest
cost-20.8 -73.9 -20.1 -20.8 -20.6 -19.6 -81.1
Equity
method-8 -7 13 27.7 18.2 13.9 72.8
FX gains 0.2 0.6 -0.7 0.1 -0.3 0.2 -0.7
etc -5.9 0.9 0.7 -4.2 -2.3 -7.7 -13.5
Total -34.4 -79.5 -7 2.8 -5.1 -13.2 -22.5
Pre-tax
income14.3 100.4 37.6 66.5 66 58.6 228.8
-8.0
13.0
27.7
18.2 13.9
4Q'09 1Q'10 2Q'10 3Q'10 4Q'10
0.2
-0.7
0.1
-0.3
0.2
4Q'09 1Q'10 2Q'10 3Q'10 4Q’10
-16-
④ Changes in the financials3. Changing KOLON
Debt decreased sharply with the right issue and
the capital reduction payment of SKC-KOLON PI
in 4Q ‘10.
Debt is forecast to increase slightly due to facility
investments, but the net debt/EBITDA multiple will
continue to decrease due to a steady increase
in EBITDA
■ Changes in Debt (Wbn)
■ Changes in Net debt/EBITDA*
(Wbn)
Total Debt
Net Debt
Net Debt Ratio
Corporate bond Grade A
Zone7.5
5.45.7
54.3 4
2.29
3.4
0
200
400
600
800
1,000
1,200
1,400
2003 2004 2005 2006 2007 2008 2009 2010
0
1
2
3
4
5
6
7
8Net debt
EBITDA
Net debt / EBITDA
(Wbn)
Financials
Holding Structures of Subsidiaries
Share trading of subsidiaries
Recent Dividends
-18-
96.6%35.0%(33.5%)
75.2%
20.0%
18
KOLONIndustries
KOLON Corp
EFMCKOLONI-net
KOLONLife Science
KOLONPharm
NEOVIEWKOLON
CambridgeKOLON
KOLON Glotech
KFM
KPL
32.0%(29.5%)
31.7% 45.1%60.0% (54.5%)
19.6%
75.2%
80.9%
100%
KOLONE&C
36.3%
TissueGeneKOLONBENIT
Sweet Meal
57.1%
Chairman & etc
52.4% (47.9%)
(Feb 18, 2011)
Holding structure of subsidiaries
-19-
Holding structure of subsidiaries
Business
Manufacture of car seat,
Sales of Imported car
Men’s wear,
Women’s wear, etc
Manufacture of N/F, P/F
yarn
and fabric
Engineering,
Manufacture of plastic
Manufacture of PI film
Manufacture of T/C, airbag
Manufacture of Phenolic
Resin
Manufacture of packing
film
Sales 894.0 418.2 516.2 166.7 111.6 110.9 26.2 92.6
OP 40.2 12.9 24.0 11.6 34.4 9.6 0.9 14.5
Net income
34.1 6.3 17.3 9.8 25.5 8.4 0.9 16.3
Equity method profit
22.4 2.7 10.1 9.6 12.4 8.2 0.7 -
32.0%
52.4%
75.2% 75.2% 80.9% 100% 50% 100% 78.6% 78.8%
Chairman, etc
Kolon Corp.
Kolon Industries
KolonGlotech
KINKOLON-GPKNCSKC KOLON
PIKPLKFMCambridge
Kolon
(Equity: Febuary 18, 2011 Common share based)
(Amount: 2010 accumulation based, Wbn)
-20-
Share trading of subsidiaries
KOLONCorp
KOLONInd
CambridgeKOLON
KOLONGlotech
KOLONE&C
GreenNarae
KFM
KOLONI-net
KeP
32.0%
72.8%6.4%
100%
11.7%
2.1%
62.6% 67.1%
0.3%
18.4%
13.8%
KOLONPharm
0.9%
33.5%
31.7% 45.0%
(Wbn) Transferor Ratio amount transferee
KFM KOLON Glotech 13.8% 27.4 KOLON Ind
Cambridge KOLONKOLON Glotech 2.1% 1.3
KOLON IndKOLON I-net 0.3% 0.2
KOLON GlotechKOLON E&C 11.7% 30.4
KOLON IndKOLON Pharm 1.0% 2.3
KePKOLON E&C 18.4% 8.5
KOLON I-netKOLON Ind 6.4% 3.0
Green Narae KOLON E&C 100% 92.7 KOLON Glotech
■ Share Holding Structure (Before share trading) ■ Share Holding Structure (After share trading)
Plan to merger
KOLONCorp
KOLONInd
KOLONI-net
KOLONE&C
KOLONGlotech
KFM
GreenNarae
33.5%
32.0%
19.1%
100%75.2%
KeP
52.2%
27.4%
After Merger
KOLONPharm
31.7%
45.0%
100%
-21-
Recent Dividends
(Wbn) 2007 2008 2009 2010
(New Corp.)
Net income 10.8 94.4 98.1 211.1
Total payout 0 5.3 2.8 28.1
Dividend payout ratio 0% 5.66% 2.84% 14.97%
Dividend yield 0% 1.0% 1.1% 1.7%
* Payout ratio and dividend yield are based on common stocks
Appendix
Balance Sheet
Income Statement
-23-
Balance Sheet
(Wbn)
2009 2010
Total Assets 1,768 1,927 2,523 3,056
Current Assets 443 409 732 1,039
Quick assets 226 223 402 656
Inventory 217 187 330 383
Fixed Assets 1,325 1,518 1,790 2,018
Investment assets 345 653 650 832
Tangible assets 981 866 1,078 1,108
Intangible assets (1) (1) 14 23
Other assets 48 55
Liabilities 1,214 1,313 1,790 1,732
Current liabilities 742 1,028 1,086 1,004
Long-term liabilities 472 284 704 728
Total Equity 554 614 733 1,324
Capital stock 107 107 98 131
Capital surplus, etc 447 508 635 1,193
New Corp.2007 2008
-24-
4Q '08 2008 1Q '09 2Q '09 3Q '09 4Q '09 2009 1Q '10 2Q '10 3Q'10 4Q '10 2010
455 1,990 415 479 604 716 2,215 732 804 777 928 3,241
Industrial Materials 129 522 102 106 108 120 436 124 138 142 156 561
Chemical 129 607 126 146 165 141 578 192 202 204 209 806
Films 112 448 103 127 140 139 509 147 168 179 178 672
Fashion 0 0 0 81 206 287 149 175 126 252 702
Others 85 413 85 100 110 110 405 120 122 126 133 501
39 121 44 41 47 49 180 45 64 71 72 251
Industrial Materials 21 65 21 16 15 14 66 12 16 19 16 62
Chemical 9 31 12 13 14 9 48 12 16 18 14 61
Films 11 33 11 13 14 13 51 13 20 25 25 82
Fashion 4 15 19 9 14 9 19 52
Others -2 -9 0 -1 -1 -2 -4 -3 -2 1 -2 -6
6 -46 -29 8 -24 -34 -80 -7 3 -5 -13 -23
Net Interest cost -17 -61 -17 -17 -19 -21 -74 -20 -21 -21 -20 -81
Net FX gains -5 -21 -3 2 1 0 1 -1 0 0 0 -7
Net equity method gains 17 25 -6 11 -4 -8 -7 13 28 18 14 73
Others(Net) 10 11 -3 11 -1 -6 1 1 -4 -2 -8 -14
45 80 14 48 23 14 100 38 67 66 59 229
32 94 13 41 18 28 100 36 57 69 49 211
Non-operating Gains / Losses
Pre-tax Profi t
Sales
Operating Profi t
Net income
Income Statement
(Wbn)