Release Date: February 10, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- OCI Holdings Co Ltd (XKRX:010060, Financial) recorded a 35% increase in sales revenue in 2024, reaching KRW3,577 trillion.
- OCI TerraSus, the Malaysian plant, saw a 45% increase in sales revenue in Q4 due to the shipment of previously delayed orders.
- The company is preparing for the sale of over 360 megawatts of solar projects in 2025, indicating future growth potential.
- OCI TerraSus plans to enter the semiconductor-grade polysilicon business through a joint venture with Japan's Tokuyama Corporation, aiming to enhance process efficiency and profitability.
- OCI Holdings executed a KRW70 billion share buyback in 2024 to enhance shareholder returns and respond to falling share prices.
Negative Points
- Operating profit declined by 81% in 2024, with an operating profit margin of only 2.8%.
- OCI TerraSus experienced an operating loss in Q4 due to shutdown maintenance, leading to increased unit costs and inventory valuation loss.
- DCRE, the subsidiary involved in urban development, reported significant losses, contributing to the decline in operating profit.
- Mission Solar Energy, part of OCI Enterprises, continues to report losses due to weak residential module sales and falling prices.
- The dividend per share for fiscal year 2024 decreased to KRW2,200, reflecting the company's cautious approach to cash flow management.
Q & A Highlights
Q: Can you elaborate on the reasons behind the significant decline in operating profit despite the increase in sales revenue for 2024?
A: The decline in operating profit, despite a 35% increase in sales revenue, was primarily due to the consolidation of OCI company into our financials and challenges faced by OCI TerraSus and DCRE. OCI TerraSus experienced a sales decline due to US solar market uncertainties, while DCRE faced accounting losses from increased costs and land devaluation. - Su Mi Lee, Managing Director
Q: What were the main factors contributing to the Q4 2024 operating loss?
A: The Q4 operating loss was driven by weak market conditions, uncertainties related to the US presidential election and solar policy, and shutdown maintenance at OCI TerraSus, which increased unit costs and led to inventory valuation losses. DCRE's inventory evaluation loss also contributed to the loss. - Su Mi Lee, Managing Director
Q: How is OCI TerraSus expected to perform in the upcoming quarters?
A: OCI TerraSus has completed maintenance and is now operating normally. We expect increased production, normalized manufacturing costs, and improved sales volume in Q1. Once US solar market policies and tariffs are resolved, demand for non-China polysilicon should normalize, benefiting OCI TerraSus. - Su Mi Lee, Managing Director
Q: What is the outlook for OCI Enterprises and its solar module business?
A: OCI Enterprises continues to face challenges due to weak residential module sales and falling prices. However, a project sale originally planned for Q4 is expected to complete in Q1, and we are preparing for the sale of over 360 megawatts of projects in 2025. The residential solar market will focus on inventory clearance in the first half of the year. - Su Mi Lee, Managing Director
Q: Can you provide more details on the US solar business strategy and joint ventures?
A: We are in discussions with global solar companies to establish joint ventures for building the US solar value chain. The first initiative is a JV for cell production in the US. More details will be shared once agreements are finalized. This strategy aligns with the Trump administration's trade sanctions, which favor non-China polysilicon and wafers. - Su Mi Lee, Managing Director
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
