Costs "Soar," Demand "Plunges"... LX Hausys and KCC Both Struggle in Q3

Raw Material Prices and Freight Costs Rise, Demand for Interior Renovations Declines
LX Hausys Operating Profit Down 62%; KCC Down 32% as Well

The building materials industry was hit by three major headwinds at once in the third quarter of this year: rising raw material prices and freight costs, and declining demand for interior renovations. With the seasonal off-peak period approaching, concerns about profitability are also mounting.

According to the Financial Supervisory Service’s Electronic Disclosure System on November 6, LX Hausys reported consolidated operating profit of KRW 8.4 billion in the third quarter, down 62% year on year. Revenue rose 0.9% from the same period last year to KRW 805.3 billion, but the company swung to a net loss of KRW 11.7 billion.

By business segment, the building materials division, which accounts for most of revenue, posted an operating loss of KRW 400 million, while the automotive materials and parts and industrial films division earned KRW 8.7 billion in operating profit. Revenue in the building materials division contracted as high interest rates and lending restrictions reduced home transactions and shrank demand for interior renovations. Apartment transactions in the Seoul metropolitan area continued to decline in August and September amid higher real estate taxes and the effects of lending restrictions. In automotive parts and industrial films, revenue slowed due to lower production caused by strikes at automakers and reduced export volumes of films for home appliances.

Raw material prices also rose sharply. LX Hausys paid KRW 1,663 per kilogram for PVC in the first half of 2026, up 45% from KRW 1,145 in 2025. The price of MMA per kilogram also climbed 65%, from KRW 1,918 last year to KRW 3,175 in the first half of this year.

"The outlook for stronger results in the first half and weaker results in the second half continues, as raw material prices for PVC (polyvinyl chloride), used in window frames, and MMA (methyl methacrylate), a raw material for acrylic resin, have risen, logistics costs have increased, and the real estate market recovery has been delayed," said Kim Kiryong, a researcher at Mirae Asset Securities. "In the fourth quarter, the company is expected to swing to a loss due to fixed costs amid declining revenue, raw material cost pressures, and seasonal factors."

KCC reported third-quarter operating profit of KRW 85.2 billion, down 32.2% from the same period a year earlier. Revenue increased 4.1% to KRW 1.6732 trillion, while the company swung to a net loss of KRW 1.6718 trillion. KCC was also affected by higher oil prices resulting from the Middle East war, further increases in petrochemical raw material prices, rising transportation costs, and declining demand for interior renovations.

Among the key raw materials, the price of PVC resin per kilogram rose 21%, from KRW 1,205 last year to KRW 1,456 in the first half of this year. The price of solvent, used in paints, increased 39% over the same period, from KRW 1,149 to KRW 1,606. With renewed tensions in the Middle East, a decline in PVC resin prices has become difficult to expect.

Although the price of silicone raw materials edged down, rising transportation costs squeezed margins because of the business's high proportion of overseas sales. The decline in Samsung Electronics' share price also put downward pressure on KCC's stock, as KCC holds a 10.49% stake in the company.

"The fourth quarter is seasonally slow, and it will be difficult to expect operating profit to rise once the impact of higher raw material prices and other costs, including performance bonuses, is factored in," said Jung Kyunghee, a researcher at LS Securities.

This content was produced with the assistance of AI translation services.