LG Hausys Ltd., the building and decorative materials offshoot of South Korean giant LG Chemical Ltd., is pulling out of PVC window profile manufacture in Russia.
LG Hausys Rus halted production at its two plants at Elektrostal, near Moscow, and the southwestern Siberian city of Novokuznetsk, at the start of this year. Both facilities are to be sold off as a business or a property complex, according to the company.
It blamed the pull out, which includes stopping importing profiles, on the low profitability of the business in Russia, according to its deputy director Denis Sapozhnikov, quoted in the Russian business daily Vedomosti.
With a shrinking share of the domestic profiles market, estimated last year at barely 1.5 percent, the Russian subsidiary recorded a net loss in 2013 of 608,200 euros on sales of just over 30 million euros.
LG Hausys Rus has been squeezed by the major profile PVC window suppliers including Rehau, Profine and Veka with a reported 44 percent share in what is becoming a saturated market. Estimated at 400,000 metric tons per year, the domestic market shrank 10 percent last year and is expected to halve by 2020, according to Russian consultancy O.K.N.A Marketing.
It was in 2010 that LG Hausys took over the 6,000-metric-ton-per-year Novokuznetsk plant of its local partner Sibpromplast, raising output to 10,000 metric tons per year in 2011 with the addition of five more extruding lines. That year, the firm added its other facility near Moscow.
Importing profiles, raw material and components from South Korea has also become unprofitable due to the sharp change in the foreign currency rate of the rouble against the Korean won, according to Sapozhnikov.