PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩90 per share · Prices as of the 2026-10-02 close
Namhae Chemical, Korea's largest fertilizer maker, saw operating profit nearly wiped out in the first quarter of 2026 amid a Middle East-driven raw material price spike, before rebounding in the second quarter, underscoring how sensitive its earnings remain to input cost swings.
Consolidated 2025 revenue reached KRW 1,604.4 billion with operating profit of KRW 43.1 billion, up from the prior year, as the operating margin edged up from 2.4% to 2.7%.
Operating profit in the first quarter of 2026 fell to near breakeven due to a raw material price surge, but rebounded to KRW 12.9 billion in the second quarter.
The company maintains roughly 40% share of the domestic fertilizer market, with NongHyup Economic Business Federation as its core customer.
Through subsidiary NES Materials, the company is diversifying into high-purity sulfuric acid for the semiconductor industry.
The debt ratio improved from 73.0% in 2022 to 49.2% in 2025, indicating a strengthening financial structure.
Founded in 1974, Namhae Chemical is Korea's largest fertilizer producer and operates NES Materials as a subsidiary.
Its core fertilizer-chemical segment produces urea fertilizer, compound fertilizer, and customized fertilizer for domestic and overseas markets, while also selling ammonia and sulfuric acid to chemical companies.
Domestic fertilizer sales center on an annual bidding contract with NongHyup Economic Business Federation, and the company holds roughly 40% of the domestic fertilizer market. Exports are concentrated in nearby Southeast Asian markets, with compound fertilizer as a key export item.
The oil distribution business purchases petroleum products from refiners and sells them through company-operated and independent gas stations at a margin, providing a relatively stable revenue stream.
As a newer growth avenue, subsidiary NES Materials produces high-purity sulfuric acid for the semiconductor industry, having passed customer qualification testing in 2024 and continuing production and sales since, adding an advanced-materials dimension to the traditional fertilizer-and-chemicals business.
Domestic competitors include Jobi, though Namhae Chemical is considered to lead in both revenue scale and market share.
Because raw materials such as ammonia, phosphate rock, and sulfur are largely imported, international commodity price cycles and currency movements have a direct bearing on the company's cost structure.
| Quarter | Revenue | Operating profit | Op. margin |
|---|---|---|---|
| 2025Q2 | ₩426.2B | ₩14.2B | 3.3% |
| 2025Q3 | ₩360.3B | ₩15.7B | 4.4% |
| 2025Q4 | ₩380.2B | -₩7.4B | −2.0% |
| 2026Q1 | ₩493B | -₩100M | −0.0% |
| 2026Q2 | ₩504.9B | ₩12.9B | 2.6% |
| Year | Revenue | Operating profit | Net income (parent) | Op. margin | ROE | Debt-to-equity |
|---|---|---|---|---|---|---|
| 2022 | ₩2.2T | ₩62.6B | ₩47.3B | 2.9% | 9.2% | 73.0% |
| 2023 | ₩1.6T | ₩11.1B | ₩12B | 0.7% | 2.3% | 60.5% |
| 2024 | ₩1.5T | ₩36.3B | ₩21.5B | 2.4% | 4.1% | 44.7% |
| 2025 | ₩1.6T | ₩43.1B | ₩26.9B | 2.7% | 4.9% | 49.2% |
Consolidated basis (financial statements including subsidiaries) · Final figures from DART filings · Net income attributable to owners of the parent · Data as of 2026-08-21
Consolidated revenue rose to KRW 1,604.4 billion in 2025 from KRW 1,519.1 billion in 2024, and operating profit increased to KRW 43.1 billion from KRW 36.3 billion, lifting the operating margin from 2.4% to 2.7%.
Net income attributable to owners rose steadily to KRW 26.9 billion in 2025 from KRW 21.5 billion in 2024 and KRW 12.0 billion in 2023.
By contrast, 2022 posted the highest profitability of the four years shown, with revenue of KRW 2,169.6 billion, operating profit of KRW 62.6 billion, and net income of KRW 47.3 billion, framing the recent trend as a gradual recovery from a post-2022 profit dip.
On a quarterly basis, operating profit was a solid KRW 14.2 billion in the second quarter of 2025 and KRW 15.7 billion in the third quarter, before swinging to a loss of KRW 7.4 billion in operating profit and KRW 5.8 billion in net income in the fourth quarter.
In the first quarter of 2026, revenue grew to KRW 493.0 billion, yet operating profit was essentially flat at roughly negative KRW 0.1 billion and net income posted a loss of KRW 2.0 billion, with a Middle East-driven surge in raw material costs cited as the main cause; according to the company's disclosure, ammonia prices rose 50% year-on-year, urea 75%, and sulfur 133% in the first quarter of 2026.
The second quarter of 2026 saw a recovery to KRW 504.9 billion in revenue, KRW 12.9 billion in operating profit, and KRW 7.9 billion in net income, suggesting some easing of the first-quarter cost shock.
On the cash flow side, operating cash flow improved from negative KRW 96.1 billion in 2022 to KRW 101.9 billion in 2023 and KRW 120.3 billion in 2024, before moderating to KRW 47.6 billion in 2025, while the debt ratio fell from 73.0% in 2022 to 49.2% in 2025, pointing to an overall stabilizing balance sheet.
Korea's domestic fertilizer industry is a relatively stable market underpinned by an annual bidding structure with NongHyup Economic Business Federation, and Namhae Chemical leads this market with roughly 40% share.
On the other hand, raw materials such as ammonia, phosphate rock, and sulfur are largely or entirely imported, exposing the business to international commodity cycles and geopolitical disruption.
In 2026, conflict in the Middle East disrupted supply chains from major urea exporters such as Qatar, prompting domestic firms to secure alternative sourcing from Oman and Southeast Asia, with the Yeosu Gwangyang Port Authority holding meetings with affected shippers to discuss port operation support.
This supply instability drove sharp swings in ammonia, urea, and sulfur prices, adding to cost pressure for fertilizer producers. Within the domestic competitive landscape, smaller players such as Jobi exist, but Namhae Chemical is considered to hold a dominant position in terms of revenue scale.
Meanwhile, steady growth in demand for high-purity chemicals from the semiconductor industry gives the company's NES Materials-driven high-purity sulfuric acid business potential as a growth avenue distinct from its traditional fertilizer-centered operations.
Future performance is likely to hinge heavily on whether raw material markets stabilize and how the geopolitical situation evolves.
The rebound in operating profit from the first-quarter 2026 slump to the second quarter suggests some effect from price pass-through or diversified raw material sourcing, though no official explanation for the specific drivers has been confirmed.
If supply chain disruptions from urea exporters such as Qatar, triggered by conflict in the Middle East, persist, raw material procurement costs could remain volatile, and the company has been responding by securing alternative import sources in Oman and Southeast Asia.
The annual supply contract with NongHyup Economic Business Federation, which underpins domestic fertilizer demand, is renegotiated every year, and the terms of the next contract remain a variable that will affect future revenue stability.
The NES Materials high-purity sulfuric acid business for semiconductors has continued production and sales since passing customer qualification testing in 2024, and the pace of customer expansion will be a key gauge of medium-to-long-term diversification progress.
The oil distribution business is expected to continue serving as a stable revenue source through its refiner-purchase margin structure, and it remains to be seen whether the diversified fertilizer, chemical, oil, and advanced materials business mix can cushion future cost shocks.
On the earnings side, profitability has gradually recovered since 2023, but the recurrence of cost shocks such as the one seen in the first quarter of 2026 shows that single-quarter results can still swing sharply.
The stock's price-to-book ratio has often traded at a discount to net asset value, which can be read as reflecting both the earnings volatility tied to raw material prices and a relatively modest profit margin.
The price-to-earnings multiple has fluctuated between periods of profit recovery and contraction, making it difficult to characterize the company's standing within the sector based on any single point-in-time multiple.
Dividend payments have historically moved in line with earnings trends, and how dividend policy adjusts during the current profit-recovery phase remains a point worth watching.
Overall, the current valuation level can be interpreted as reflecting both a business structure exposed to cost volatility and an early-stage profit recovery.
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 2026-08-21
Namhae Chemical maintains roughly 40% share of the domestic fertilizer market with NongHyup Economic Business Federation as its core customer, giving it a relatively stable demand base.
Production infrastructure and distribution networks accumulated since its 1974 founding provide a competitive edge over smaller rivals. This market position helps cushion sales volumes even when cost shocks occur.
Despite operating profit nearly disappearing in the first quarter of 2026 amid a raw material price surge, it expanded again to KRW 12.9 billion in the second quarter, demonstrating resilience. The annual operating margin has also gradually improved from 0.7% in 2023 to 2.7% in 2025. This suggests the underlying business retains the capacity to generate profit even after a short-term shock.
Subsidiary NES Materials produces high-purity sulfuric acid for semiconductors and has continued production and sales since passing customer qualification testing in 2024, forming a new revenue stream distinct from the traditional fertilizer-and-chemicals business.
Growing demand for high-purity chemicals in the semiconductor industry offers room for this business to expand. Diversification could work over the long term to reduce the company's reliance on fertilizer market conditions.
Heavy dependence on imported raw materials such as ammonia, phosphate rock, and sulfur directly exposes results to international market conditions and geopolitical developments. In the first quarter of 2026, ammonia prices rose 50%, urea 75%, and sulfur 133% year-on-year, nearly wiping out operating profit. If tensions in the Middle East flare up again, a similar shock cannot be ruled out.
Posting operating losses or near-breakeven results in both the fourth quarter of 2025 and the first quarter of 2026 shows that earnings predictability remains low. Revenue has grown steadily, but the pattern of profit deteriorating sharply during quarters of elevated cost burden has recurred. This makes it difficult to draw firm annual conclusions from any single quarter's results.
The oil distribution business operates on a margin-on-purchase model with relatively thin margins, which can increase the proportion of lower-margin revenue.
The fact that a substantial portion of domestic fertilizer sales depends on an annual bidding contract with NongHyup Economic Business Federation may limit the company's ability to immediately pass on rising costs into prices. This structural factor can constrain margin defense during periods of sharp cost increases.
Conflict in the Middle East disrupted supply chains from major urea exporters such as Qatar, driving up prices for ammonia, urea, and sulfur. The company has responded by securing alternative import sources in Oman and Southeast Asia, though such alternative sourcing may involve additional logistics costs. If geopolitical instability persists or recurs, cost pressure could intensify again.
The annual supply contract with NongHyup Economic Business Federation, central to domestic fertilizer sales, is renegotiated every year, and changes in contract terms can directly affect revenue and pricing.
Changes in government agricultural subsidy or fertilizer price stabilization policy could further constrain the company's pricing power. These policy and contract variables represent external factors largely outside the company's control.
Imports of major raw materials are generally settled in US dollars, so currency fluctuations have a direct impact on costs. Rising shipping rates have also historically added to cost burdens. Expanding alternative import sources with longer shipping distances could add further upward pressure on logistics costs.
This is when the third-quarter 2026 quarterly report is expected to be filed, allowing a check on whether the second-quarter recovery continued and whether raw material cost pressure eased.
This is when the outcome of next year's mineral fertilizer supply contract negotiation with NongHyup Economic Business Federation should become clear, which could affect revenue visibility.
It is worth continuously monitoring the situation in the Middle East, whether supply chains from urea exporters such as Qatar normalize, and trends in international ammonia, urea, and sulfur prices.
Progress in securing new customers and expanding sales volume for NES Materials' high-purity sulfuric acid for semiconductors can serve as an indicator of new-business momentum.
Namhae Chemical is the leading player in Korea's domestic fertilizer market with roughly 40% share, and its 2025 revenue and operating profit improved from the prior year, continuing a profit-recovery trend.
However, the first quarter of 2026 saw operating profit nearly disappear due to a Middle East-driven raw material price surge before rebounding in the second quarter, reaffirming a business structure whose results can swing sharply with cost volatility.
Financial stability has gradually improved, with the debt ratio falling from 73.0% in 2022 to 49.2% in 2025.
The new NES Materials high-purity sulfuric acid business for semiconductors holds potential as a growth avenue distinct from the traditional fertilizer-centered structure, though it still appears to be at an early stage.
Overall, the company can be assessed as having both the strength of a stable domestic base and diversification efforts, and the weakness of cost volatility tied to imported raw materials. Ahead of any investment decision, it is worth watching upcoming quarterly results together with trends in raw material markets.
Report written 2026-09-05 · Data as of 2026-09-04
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