Korea Zinc Delivers Strong Q3 Revenue of KRW 3.2 Tril., Up 40% YoY Amid External Challenges

Korea Zinc Delivers Strong Q3 Revenue of KRW 3.2 Tril., Up 40% YoY Amid External Challenges

FleishmanHillard
Aesop Kim
+82-10-3200-0493
aesop.kim@fleishman.com

Korea Zinc (KRX:010130), the world’s leading non-ferrous metal smelting company, reported on Nov. 12 its consolidated Q3 revenue of KRW 3.2 trillion, marking a substantial 40% year-on-year increase. Amid challenging conditions, including fluctuating exchange rates and elevated maintenance costs, Korea Zinc’s solid performance highlights its strategic resilience and sustained growth.

Young Poong, currently involved in management dispute with Korea Zinc, reported contrasting Q3 results on the 14^th, posting an operating loss of KRW 17.9 billion and a 38% drop in revenue year-on-year. This performance report, the first since Young Poong and MBK Partners declared a takeover bid for Korea Zinc on September 13, comes amid ongoing operational and environmental challenges faced by Young Poong.

Korea Zinc’s 6.5% decline in operating profit was largely attributed to global price shifts in lead and added costs from advanced maintenance at its Onsan Smelter. However, the company maintains an optimistic outlook for Q4, citing stabilizing exchange rates, rising metal prices, and full operational capacity with the completion of maintenance. Korea Zinc’s proactive approach to production stability is expected to maximize Q4 performance, as metal prices, including precious metals like gold and silver, have shown an upward trend, with zinc and copper—key revenue drivers—remaining high.

On a year-to-date basis, Korea Zinc achieved an 18.5% increase in cumulative revenue to KRW 8.64 trillion and a 30.6% increase in operating profit to KRW 603.2 billion compared to the same period last year.

Young Poong, on the other hand, continues to grapple with operational and environmental challenges. Its Q3 report revealed a loss of KRW 17.9 billion and a sharp 78% drop in net income year-on-year. The Seokpo Smelter’s utilization rate dropped to an average of 53.54%, reflecting persistent inefficiencies.

After posting an operating loss of KRW 43.2 billion in Q1, Young Poong saw a slight profit of KRW 80 million in Q2, before slipping back into the red in Q3. The continued decline in performance is largely attributed to reduced utilization rates at the Seokpo Smelter.

Adding to these difficulties, the Korean Supreme Court recently upheld a two-month (60-day) suspension of Seokpo facility for environmental violations, including discharging toxic wastewater. This follows a history of 76 environmental violations since 2013, raising serious questions about its commitment to responsible management.

Year-to-date, Young Poong has reported KRW 2.15 trillion in revenue and an operating loss of KRW 61 billion. As Young Poong and MBK Partners pursue a hostile takeover of Korea Zinc, their financial and environmental struggles have drawn scrutiny.

Korea Zinc’s resistance to the hostile takeover has gained international support, with Australian lawmakers and officials highlighting the company’s contributions to regional growth through clean energy and job creation. They have raised strong concerns about the potential risks of an MBK-Young Poong takeover on critical supply chains and proprietary technology.

Both Korean and Australian political leaders have called for measures to block the acquisition, underscoring Korea Zinc’s vital role in supplying high-purity sulfuric acid, a key material in semiconductor manufacturing, to global chipmakers like Samsung and SK Hynix.

As Korea Zinc continues to secure its role in global supply chains and environmental responsibility, its approach contrasts with the ongoing operational and environmental hurdles faced by Young Poong. In light of these results, industry experts expect stakeholders at the upcoming extraordinary shareholders’ meeting to closely assess the governance and performance metrics of both companies.

An industry official noted, "During the voting process at the upcoming shareholders' meeting, Korea Zinc shareholders will inevitably compare the management capabilities of both sides’ executives."

At an emergency board meeting on November 13, Korea Zinc withdrew its public stock offering and announced several shareholder-oriented initiatives, including Chairman Yun B. Choi’s decision to step down as board chair, aimed at garnering support from institutional and minority shareholders.