By Kim Hyun-bin

KCC Corporation stocks dropped sharply Tuesday, plunging as much as 17 percent a day after the company reported disappointing earnings results for the fourth quarter of 2021.

KCC Corporation is a Korean chemical and auto parts manufacturer.

On Monday, KCC announced that its operating profit in the fourth quarter of last year was 68.3 billion won, up 26.8 percent from a year earlier, while, sales increased 12.6 percent to 1.51 trillion won, with a net loss of 237.5 billion won. As a whole, sales reached 5,874.8 billion won in 2021, up 15.6 percent from the previous year, and operating profit was 382.6 billion won, up 185 percent. The net profit reflected a loss of 58.89 billion won.

KCC Chairman Chung Mong-jin

Hana Financial Investment says KCC's sales in the fourth quarter fell short of estimates, but the trend of improving margins at Momentive, its silicones and quartz subsidiary, did not slow down.

"The reduction in Momentive's margin from last July to October was due to the surge in the price of the raw material of silicon metal," Yoon Jae-seong, a researcher at Hana Financial Investment, said. "In November, the cost of production soared. But the margin rate is improving and we believe that the solid margin flow continued in January."

Operating profit in the first quarter of this year is expected to fall 43 percent from the previous quarter to 68.3 billion won. The operating profit of the silicon business is estimated at 38.5 billion won, which is expected to decrease by 56 percent from the previous quarter's 88.3 billion won.

"Due to the sharp drop in silicon metal prices, the EBITDA margin bottomed out in October and recovered significantly from November, but it is estimated that various expenses were reflected in December," Yoon said. "It seems that logistics costs due to the regional diversification of raw material procurement and other factors have been temporarily reflected."

KCC's stock prices ended Tuesday with a drop of 21.04 percent, standing at 296,500 won.