Kyung Dong Navien Q2 operating profit jumps 64% on US tariff refund

Kyung Dong Navien posted a sharp improvement in profitability in the second quarter, driven in part by a refund of US tariffs. Sales edged down from the same period a year ago, but operating profit climbed more than 60 percent and net profit for the period more than tripled.

The company disclosed Tuesday that it recorded sales of 388.2 billion won ($274 million) and operating profit of 84.3 billion won on a consolidated basis in the second quarter. Sales fell 1.0 percent from 392.3 billion won in the year-earlier period, while operating profit rose 64.6 percent from 51.2 billion won.

The gains in pre-tax profit and net profit were even more pronounced than the operating profit increase. Pre-tax profit from continuing operations came in at 88.4 billion won, up 183.3 percent from 31.2 billion won a year earlier. Net profit for the period jumped 254.1 percent to 68.5 billion won from 19.3 billion won in the same quarter last year.

Securities analysts had anticipated a one-time gain from the tariff refund. DS Investment Securities forecast in June that changes in how the United States enforces tariffs on steel and aluminum would lower the tariff rate Kyung Dong Navien had been paying, and that refunds on tariffs collected in 2025 would be reflected as non-operating income in the second quarter.

Core business profitability also improved. The company's second-quarter operating margin reached 21.7 percent, up 8.7 percentage points from about 13.0 percent in the same period last year and up 6.7 percentage points from 15.0 percent in the first quarter. Second-quarter sales fell 8.7 percent from the first quarter, but operating profit rose 32.0 percent.

The earnings momentum carried through the first half. Sales for the first half totaled 813.5 billion won, up 7.4 percent from the year-earlier period. Operating profit rose 63.4 percent to 148.1 billion won, pre-tax profit surged 102.3 percent to 166.2 billion won, and net profit for the period climbed 121.7 percent to 126.5 billion won.

"In the second quarter, the refund of tariffs previously paid to the United States had a positive effect on our earnings to a certain degree," a company official said. While US tariff impositions weighed on Kyung Dong Navien's cost structure last year, lower tariff rates and refunds on past payments have become drivers of profit improvement this year.