After aiming for the mask gang, I was frustrated… Successive contract termination
According to the Financial Supervisory Service on the 10th, there are a total of five listed companies that have announced the termination of the mask supply contract since last October.
On the 31st of last month, Soribada announced that the sales and purchase contract for the triple nonwoven disposable mask worth 6 billion won was terminated. This is equivalent to 13.1% of consolidated sales in 2019. The contract was signed in July with YJ Corporation and M Plus F&C, a subsidiary of the Military Mutual Aid Association, but was informed that the mask business would be terminated due to an increase in mask production and a plunge in production and distribution prices.
An official from Soribada said, “We were going to supply a triple nonwoven disposable mask to YJ Corporation and supply it to M Plus FNC.” “If it was as planned, the delivery had to be finished on August 7th. It has also been extended several times.”
He said, “Soribada recently requested YJ Corporation to notify the delivery location and pay for the delivery location ahead of the contract termination date, but M Plus FNC announced that it would not be able to purchase additional purchases, making it virtually impossible to fulfill the contract.”
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In addition, the same is true of listed companies that announced the termination of the mask supply contract. Korean Cosmetics also signed a mask supply contract worth 21.9 billion won (16.7% of consolidated sales) in 2019, but it was eventually terminated. Terminated.
An official from Vivian said, “The government’s implementation of public masks stabilized the supply and demand of masks, and after the end of the public masks, more companies entered the mask business.” I said.
A representative of Korean cosmetics also said, “The price has dropped a lot because the mask business is overheated.” “It was a matter that the supply contract was inevitably canceled due to difficulties in reality.”
In fact, according to the main production trend of mask manufacturers announced by the Ministry of Food and Drug Safety, the total production of quasi-drug masks per week in January was 157.78 million. In February of last year, when the turmoil broke out, there were only 69.9 million.
Earlier, in March last year, the government implemented a five-part mask system to prevent the mask uprising, and then issued a policy to stop exporting masks. Accordingly, in May, the total mask production exceeded 100 million units, and in June, it increased to 12,373 million units.
In July, when the official supply of masks was ended, masks changed from public supply to market supply. Since then, the number of mask manufacturers licenses and items has increased rapidly. In January 2020, there were 137 mask manufacturers, but in June it increased to 238, reaching 1134 as of January. The number of licensed items also increased from 1717 items in June last year to 4047 items as of January.
As a result, the price of the mask has dropped significantly. In the case of KF94 online, it soared to 4,525 won in March from 4156 won per piece in February last year, but dropped to 1540 won in July. After that, the price continued to decline, at 687 won per Hyundai in January.
The problem is that most of the time when we started the mask business was last year. In the case of Soribada, mask manufacturing and wholesale/retail business was added to the business purpose in February of last year, and Sehwa IMC also added the manufacturing and sales of quasi-drug products such as masks to the business purpose in July of last year.
In the case of Vivian, in June of last year, to enter the mask business and improve its financial structure, it raised 65 billion won through a paid-in capital increase, and invested about 30 billion won in the idle space of the Ssangbangwool factory in the Iksan National Industrial Complex to make 3D and 2D mask facilities It also introduced 25 units and 5 dental mask facilities.
An industry insider pointed out, “If you look at companies that have been in the mask business since last year, there are many places where the main business itself is sluggish. It may vary depending on the time, but there are many companies that are problematic.”
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◇ Due to the sluggish main job, there was a double litigation
Companies that have actually seen a frustration in the mask business are also sluggish in their jobs.
Vivian, who invested tens of billions of dollars in the mask business, recorded a consolidated operating loss of about 370 million won in the third quarter of last year. Vivian also recorded a consolidated operating loss of 455 million won in 2019. Vivian had an operating profit of 400 million won in 2018, but before that, it recorded a deficit for several years.
The same goes for Korean cosmetics. As of the third quarter of last year, the consolidated operating loss amounted to 11.5 billion won, and it has suffered an operating loss since 2018 (about 17.4 billion won in 2018, about 7.5 billion won in 2019).
An industry insider said, “Because they are cosmetics and other retail companies, they were affected a lot by Corona 19. It was difficult to generate sales offline, so we jumped into new businesses including masks.”
In the case of Soribada, it plans to file a lawsuit through the termination of the supply contract. According to the subsidiary agreement of this contract, if Soribada, which supplies masks, confirms the quantity, YJ Corporation, which receives the supply, must pay the price, and notify the delivery plan a week before delivery to the M Plus FNC receiving the received mask. It is made of.
In addition, M Plus FNC, who was notified of the delivery plan, is supposed to receive the quantity within 10 days. In accordance with these provisions, Soribada announced that it will file a lawsuit against YJ Corporation and a claim for damages against M Plus FNC.
An official from Soribada said, “We responded to the delay several times at the request of the customer for smooth business progress, but the delivery was not completed until the end of last year.” “I will claim the return of the invested funds and the expected profit through legal procedures according to the contract details. I said.