Korea Zinc Q3 Operating Profit Halves on Weaker Metal Prices

Korea Zinc’s third-quarter operating profit almost halved from a year earlier even as sales jumped more than 46%. The South Korean smelter blamed weaker metal prices and exchange rates, along with early spending on its US smelter project. Alongside the results, its board approved cancelling more than half of its treasury shares and revived a stock split plan stalled by litigation, the Seoul Economic Daily reported on Wednesday.

Consolidated sales for July to September rose 46.3% year on year to 6.0861 trillion won, while operating profit fell 48.2% to 141.7 billion won, according to reports by Seoul Economic Daily, NoCut News and The Asia Business Daily.

Net income surged 218.6% to 225.4 billion won (US$167.9 million), Yonhap reported via The Korea Times, citing a regulatory filing. Yonhap said the results fell short of market expectations, with a Yonhap Infomax survey putting the average analyst estimate for net profit at 271.5 billion won.

Profit squeezed by metal prices and US project costs

NoCut News reported that prices of precious metals and some key minerals fell during the quarter, as did the exchange rate, and that early spending on Project Crucible weighed on short-term results. Seoul Economic Daily described Project Crucible as a critical minerals smelter being built in Tennessee at a cost of about US$7.4 billion.

A company official told NoCut News that if metal prices and exchange rates stabilise and full-scale germanium production broadens the portfolio, “profitability is expected to rise”.

On a separate, non-consolidated basis, sales rose 40.2% to 3.6573 trillion won and operating profit slipped 4.6% to 224.3 billion won, NoCut News reported, adding that the company has now posted 107 straight quarters of operating profit.

For the first nine months, revenue rose 56.8% to 18.53 trillion won and operating profit climbed 83.6% to 1.47 trillion won, according to a TipRanks summary of the provisional results, which remain subject to external auditor review.

At a board meeting on November 4, Korea Zinc resolved to cancel 246,665 of its 479,737 treasury shares, or 51.4%, in January. The remaining 233,072 shares will be used over the next decade for purposes including employee compensation, according to Seoul Economic Daily and The Asia Business Daily.

The company will also put a stock split proposal to its annual shareholders’ meeting in March, aiming to improve investor access and share liquidity, Seoul Economic Daily reported. The split was first approved at an extraordinary shareholders’ meeting in January last year, but follow-up steps were suspended after Korea Corporate Investment Holdings, a special purpose vehicle set up by MBK Partners, and Young Poong filed for an injunction and a lawsuit, the paper said.

The board also set a third-quarter dividend of 5,000 won per share, bringing cumulative dividends for the first three quarters to 305.9 billion won, The Asia Business Daily reported. The company said it aims to ensure “the benefits of rising corporate value can be returned to shareholders”.

What’s next

The record date for the third-quarter dividend is November 29. The treasury share cancellation is scheduled for January 2027, and a board meeting before the March 2027 annual meeting will set the split ratio and record date, according to The Asia Business Daily and Seoul Economic Daily. Korea Zinc plans to diversify its portfolio, including expanding germanium production, the reports said.

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