KOSPI-listed Blue Industrial Development(006740) succeeded in turning an operating profit in the first half. It is the first time in four years since 2022 that it has posted a profit on a first-half basis.
According to the Financial Supervisory Service's electronic disclosure on the 26th, Blue Industrial Development's first-half sales on a consolidation basis came to 52.6 billion won, with operating profit of 260 million won. Sales rose 19.4% from 44.1 billion won a year earlier, and operating profit swung to a surplus from a deficit.
While sales grew 19%, gross profit ballooned more than sevenfold. This is seen as the result of selling price recovery, higher utilization rates, and vertical integration working at the same time.
First-half gross profit was 7.96 billion won, more than seven times 1.08 billion won a year earlier. The gross margin also rose 12.7 percentage points, from 2.4% to 15.1%.
Rising product selling prices are cited as the driver of profitability improvement. The weighted average selling price per ton of linerboard used on the surface of corrugated boxes rose 9.4% from a year earlier. Paper prices, which had stayed low, appear to be normalizing as demand in downstream industries recovers.
Facility utilization also supported improved profitability. The average utilization rates of the Pyeongtaek plant's No. 3 machine and the Cheongju corrugating line were 88.0% and 90.2%, respectively. Given the capital-intensive nature of process industries with high fixed cost ratios, high utilization of key production facilities reduces fixed cost per unit and strengthens cost competitiveness.
Profitability also improved through vertical integration. Blue Industrial Development produces base paper at the Pyeongtaek plant, which its subsidiary Blue Package processes into corrugated board and boxes for sale. Blue Package's first-half sales were 6.938 billion won, up about 19% from a year earlier. The business structure spanning from base paper production to processing and sales is seen as increasing product added value and securing profitability.
Blue Industrial Development plans to accelerate expansion in scale on the back of its earnings recovery. In July, it completed the acquisition of an equity stake in BioX to diversify its business and established two corporations to enter new businesses. It also boosted capital, completing payment for a third-party allotment capital increase of 4.8 billion won on the 10th of this month, with another 4.0 billion won capital increase scheduled in Nov.
Kwon Hyok-beom, CEO of Blue Industrial Development, said, "For the past two to three years, the paper industry has faced sustained profitability pressure as demand in downstream industries weakened and materials and supplies prices rose," adding, "This year, demand for packaging materials is recovering as exports of cosmetics and food and e-commerce volumes increase, and tightening plastic regulations centered on Europe are also acting as a positive factor for the paper-based packaging market."