PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩0 per share · Prices as of the 2026-10-02 close
Kleannara turned operating profit positive at KRW 0.62 billion in Q2 2026 for the first time in five quarters, but a 273% debt ratio, a credit rating downgrade, and preferred-share listing concerns remain live risks.
Q2 2026 operating profit turned positive at KRW 0.62bn, with gross margin rising from 12.4% to 16.3%
Household hygiene product sales overtook paperboard sales for the first time in Q2 2026
Credit rating fell continuously from BBB+ (2023-24) to BBB (2025) to BBB- (June 2026); debt ratio rose from 173.9% in 2022 to 273.4% in 2025
Preferred shares face management-issue-designation risk on market-cap shortfall, while a KRW 12bn convertible bond's put option date approaches
Expanding US exports of toilet paper and sanitary pads, alongside a low-price sanitary pad line launched with Daiso domestically
Kleannara, founded in 1966, is a diversified paper and household-hygiene products company organized into two segments: paperboard and household hygiene items such as toilet paper, wet wipes, sanitary pads and diapers.
Centered on its Cheongju plant, the company runs a vertically integrated production system from base paper to finished goods, supplying paperboard as industrial packaging paper for food and cosmetics to domestic and overseas customers.
The household products segment operates its own brands as well as the pet-care brand Popomong, distributed through hypermarkets, Daiso, and online channels.
The company plans to raise the share of high-value products and expand overseas accounts and exports in the paperboard business, while broadening sales channels for sanitary pads through overseas exports, OEM, and public-sector procurement in the household products segment.
It recently launched a low-priced sanitary pad line (a 10-pack for about KRW 1,000) in partnership with Daiso to lower price barriers for consumers. Overseas, the company partnered with a US distributor to supply its Sunsoo Soft toilet paper brand.
However, the US tissue and hygiene market is a mature one dominated by P&G's Charmin, Kimberly-Clark's Cottonelle and Scott, and Georgia-Pacific's Angel Soft, with Costco's Kirkland and Walmart's private-label brands also expanding share through price competitiveness, making entry difficult.
To cut pulp usage in toilet paper, the company jointly developed a mineral fiber technology with Taekyung Industrial, which is scheduled for full application to toilet paper and facial tissue products starting in 2026.
| Quarter | Revenue | Operating profit | Op. margin |
|---|---|---|---|
| 2025Q2 | ₩123.5B | -₩6.2B | −5.0% |
| 2025Q3 | ₩131.3B | -₩3.3B | −2.5% |
| 2025Q4 | ₩122.6B | -₩9.3B | −7.6% |
| 2026Q1 | ₩125.1B | -₩4B | −3.2% |
| 2026Q2 | ₩136.3B | ₩600M | 0.5% |
| Year | Revenue | Operating profit | Net income (parent) | Op. margin | ROE | Debt-to-equity |
|---|---|---|---|---|---|---|
| 2022 | ₩606.5B | ₩3.8B | -₩2.9B | 0.6% | −1.2% | 173.9% |
| 2023 | ₩514.9B | -₩18.9B | -₩30.8B | −3.7% | −14.6% | 203.2% |
| 2024 | ₩537B | -₩900M | -₩22.1B | −0.2% | −11.6% | 226.7% |
| 2025 | ₩508.2B | -₩22.6B | -₩47.5B | −4.5% | −27.8% | 273.4% |
Consolidated basis (financial statements including subsidiaries) · Final figures from DART filings · Net income attributable to owners of the parent · Data as of 2026-08-23
Consolidated revenue moved without a clear growth trend over four years: KRW 606.5 billion in 2022, KRW 514.9 billion in 2023, KRW 537.0 billion in 2024, and KRW 508.2 billion in 2025.
Operating profit swung from a KRW 3.75 billion gain in 2022 to losses of KRW 18.9 billion in 2023, KRW 0.9 billion in 2024, and KRW 22.6 billion in 2025, while owners' net loss persisted for four straight years, widening from KRW 2.9 billion in 2022 to KRW 30.8 billion in 2023, KRW 22.1 billion in 2024, and KRW 47.5 billion in 2025.
On a quarterly basis, after revenue of KRW 131.3 billion and an operating loss of KRW 3.3 billion in Q3 2025, Q4 2025 revenue fell to KRW 122.6 billion while the operating loss widened to KRW 9.3 billion.
In Q1 2026, revenue was KRW 125.1 billion with a narrower operating loss of KRW 4.0 billion, and in Q2 2026 revenue rose 10.3% year-on-year to KRW 136.3 billion with operating profit turning positive at KRW 0.62 billion for the first time in five quarters.
The company attributed the turnaround to cost-structure improvement and production/operational efficiency measures, including proactively responding to raw-material price shifts and lowering manufacturing cost burden through productivity gains, while expanding power savings and process automation; Q2 gross margin rose 3.9 percentage points, from 12.4% to 16.3% year-on-year.
Still, cumulative owners' net loss over the most recent four quarters (Q3 2025 through Q2 2026) reached KRW 38.0 billion, meaning a single quarter of operating profit has not yet reversed the accumulated losses.
On a cash-flow basis, 2025 operating cash flow was negative KRW 2.1 billion, an improvement from negative KRW 5.6 billion in 2024 but well short of the positive KRW 34.2 billion generated in 2023.
The debt ratio climbed every year from 173.9% in 2022 to 273.4% in 2025, indicating that earnings recovery and balance-sheet repair have not yet moved in tandem.
The domestic paperboard market faces both demand slowdown and oversupply, intensifying inter-company competition; a credit rating agency pointed to widening operating losses from weak demand for key products combined with a heavier financial burden from large-scale facility investment.
On the cost side, international pulp prices have surged more than 20% so far this year, adding to manufacturing cost pressure.
The domestic household products market has a multilayered competitive structure spanning major brands to ultra-low-price channels such as Daiso, while overseas, the US hygiene and tissue market is a mature one dominated by global majors and private-label brands from Costco and Walmart, making share gains difficult for new entrants.
Against this backdrop, a rating agency projected that the profit structure would gradually improve as self-directed efficiency measures — halting aging facilities, operating a new waste-plastic incinerator, and expanding outsourced production — are implemented in phases.
Still, Korea Ratings cited widening operating losses from weak sales and rising costs, persistently heavy financial burden from expanded investment, and limited near- to mid-term room for operating profitability improvement as reasons behind the downgrade, suggesting recovery will take time.
Some rating material also noted that mid-to-long-term EBITDA margin could exceed 6% based on a narrowing loss in the household products (PS) segment, but this outlook is conditional on future profitability improvement.
The company stated it plans to continuously improve cost competitiveness and production/operational efficiency in the second half, strengthen its business portfolio around high-value products and growth channels, and continue manufacturing competitiveness initiatives such as power savings and equipment efficiency improvements.
In the paperboard segment, it aims to expand overseas sales infrastructure, strengthen a high-value-product-centered portfolio, and identify new overseas accounts to raise competitiveness through greater exports and improved product mix.
In household products, the company plans to broaden sales channels for sanitary pads through overseas exports, OEM, and public-sector procurement, alongside expanding the Popomong pet-care lineup.
The Cheongju plant's new waste-plastic incinerator (total investment of about KRW 65 billion) has been delayed three times from an original December completion target, pushed to February, then May, and now further, and Korea Ratings assessed that the investment is expected to run through July, keeping capex burden elevated this year; while the burden may ease somewhat once construction is finished, given weak operating profitability, voluntarily reducing debt through operating cash flow alone will likely remain difficult for some time.
A pulp-saving mineral fiber technology co-developed with Taekyung Industrial is scheduled for full application to toilet paper and facial tissue starting in 2026, with commercialization expected to save about 150 tons of pulp per month.
On governance, third-generation owner Choi Hyun-su was appointed CEO in August, taking charge of business operations and finance/procurement, while co-CEO Lee Dong-yeol oversees the Cheongju plant and HR.
The stock has continued to trade at a substantial discount to net asset value, and the absence of dividend payouts makes it difficult to discuss dividend appeal.
Recent share prices have stayed below the conversion price of the 2025 convertible bond, and market participants have floated the possibility that bondholders may opt for the early redemption (put) option rather than conversion.
The credit rating's decline to just above speculative grade adds to bond funding costs, a factor that can be reflected as a financial risk premium in valuation discussions.
On the earnings side, operating profit turned positive in Q2 2026, but the cumulative net result over the most recent four quarters remains a loss, and market assessment may hinge on whether this improvement proves durable.
With a business-mix shift (growing household products weight, expanding overseas exports) unfolding alongside financial strain (rising debt ratio, liquidity events), valuation appears to be shaped by both sets of factors simultaneously.
PER, EPS, PBR and BPS are all calculated in-house (the same method as Naver and Toss) · Dividend yield = cash dividend per share from DART filings (supplemented by KRX) ÷ current price · As of 2026-08-23
Operating profit turned positive at KRW 0.62 billion in Q2 2026, and gross margin rose from 12.4% to 16.3%. The company said it continues pursuing cost-cutting across power savings, process automation, and inventory/marketing optimization.
Management intends to maintain the same approach in the second half, making the continuity of this improvement a key point to watch.
Household product sales overtaking the paperboard segment for the first time in Q2 2026 signals a shift in the company's business center of gravity.
In the US, the company signed a supply deal for its Sunsoo Soft toilet paper brand, while domestically it broadened its channel reach with a low-price sanitary pad line co-developed with Daiso. Expansion into new categories, such as the Popomong pet-care brand, is also underway.
If the mineral fiber technology co-developed with Taekyung Industrial is applied to toilet paper and facial tissue starting in 2026, roughly 150 tons of monthly pulp savings are expected.
The Cheongju plant's waste-plastic incinerator project is also approaching its completion target, which could ease equipment-related costs once finished. Halting aging facilities and expanding outsourced production are being pursued in parallel.
The debt ratio rose every year from 173.9% in 2022 to 273.4% in 2025, and the credit rating fell continuously from BBB+ in 2023-2024 to BBB in early 2025 to BBB- in June 2026. The downgrade pushed bond refinancing rates above 10%, increasing interest burden.
A high proportion of tangible assets pledged as collateral has also led to assessments that additional borrowing capacity is limited.
In August 2026, the market capitalization of Kleannara's Class 1 preferred shares fell below the listing threshold, raising concern over designation as a management-issue stock.
A KRW 12 billion convertible bond issued in 2025 is approaching its early redemption (put) option date, and with the share price recently below the conversion price, the market has floated the possibility bondholders will opt for cash redemption over conversion.
In that scenario, the cash outflow the company would need to cover exceeds its cash and cash equivalents at the end of the first half.
Cumulative owners' net loss over the most recent four quarters reached KRW 38.0 billion, meaning the single-quarter profit turnaround in Q2 2026 has not reversed the accumulated losses. Operating losses widened to KRW 9.3 billion in Q4 2025, reflecting significant quarter-to-quarter volatility.
Rating agencies have also assessed that near- to mid-term room for operating profitability improvement is limited.
With the credit rating down to BBB-, just above speculative grade, a large volume of borrowings and bonds maturing within a year has been flagged as a funding risk. Refinancing in a high-rate environment could add further to interest expenses.
The combination of preferred-share management-issue risk and the possible exercise of the convertible bond put option means cash-outflow events are scheduled in the near term.
Related-party borrowing, such as owner-family financial support, has been used during past liquidity crises, raising the possibility of similar measures recurring.
A combination of rising international pulp prices and weak paperboard demand could pressure both cost and revenue simultaneously. Overseas markets such as the US are mature ones dominated by global major brands and retailer private labels, meaning expanding new-entrant share could take time.
Check whether approximately KRW 5 billion of maturing bonds is repaid or refinanced, and at what funding rate.
A point to verify whether the Q2 profit turnaround continued into Q3 and whether margin improvement persisted across the paperboard and household products segments.
Watch for completion and start-up of the Cheongju plant's waste-plastic incinerator and any resulting real cost savings.
Check whether Class 1 preferred shares meet the recovery requirement (45 of 90 trading days) to avoid management-issue designation.
Assess cash readiness as the early redemption (put) option date for the KRW 12 billion convertible bond arrives.
Kleannara showed early signs of cost-structure improvement, turning operating profit positive at KRW 0.62 billion in Q2 2026 for the first time in five quarters. This was accompanied by a business-mix shift, including a higher gross margin and household products overtaking paperboard in sales.
However, financial and capital-market risks are unfolding in parallel: a 273.4% debt ratio, a credit rating downgrade to BBB-, preferred-share management-issue concerns, and an approaching convertible bond put option.
Cumulative owners' net loss over the most recent four quarters stood at KRW 38.0 billion, still in loss territory, so a single quarter's profit turnaround cannot be said to have reversed this.
With the Cheongju incinerator completion, US and Daiso channel expansion, and new material technology commercialization all sequenced through the second half and into 2027, both the durability of earnings improvement and the outcome of liquidity management warrant continued monitoring.
Report written 2026-09-05 · Data as of 2026-09-04
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