Youngone Corp Reports Record Q1 Profit as FX Tailwinds Amplify OEM Recovery
Seoul, June 25, 2026 — Youngone Corp (111770.KS), South Korea's largest outdoor and sportswear OEM manufacturer, reported a 113.2% surge in first-quarter 2026 net profit to KRW 149.7 billion (approx. USD 108.5 million), driven by a significant foreign-exchange windfall on top of solid core business momentum.
Consolidated revenue for the January–March quarter rose 10.4% year-on-year to KRW 895.8 billion (approx. USD 649 million), while operating income expanded 46.3% to KRW 120.4 billion — lifting the operating margin to 13.4% from 10.1% in the prior-year period.
Part A — The Numbers
| Metric | Q1 2026 | Q1 2025 | Change |
|---|---|---|---|
| Revenue | KRW 895.8B | KRW 811.3B | +10.4% |
| Gross Profit | KRW 264.4B | KRW 209.9B | +25.9% |
| Gross Margin | 29.5% | 25.9% | +360 bps |
| Operating Income | KRW 120.4B | KRW 82.3B | +46.3% |
| Operating Margin | 13.4% | 10.1% | +330 bps |
| Pre-tax Profit | KRW 189.2B | KRW 98.3B | +92.5% |
| Net Income | KRW 149.7B | KRW 70.2B | +113.2% |
(Source: DART Filing 20260514001455)
Part B — What's Behind the Numbers
OEM Segment: Demand Recovery Gains Traction
Youngone's manufacturing OEM division — which supplies outdoor and sportswear to approximately 40 global buyers including The North Face, Lululemon, and Patagonia — generated KRW 1,111.3 billion in gross segment revenue in Q1 2026, accounting for 66% of consolidated revenue (after intercompany eliminations totalling KRW 518.8 billion). Production spans Bangladesh (KEPZ), Vietnam, El Salvador, Ethiopia, Uzbekistan, and India, reflecting a diversified footprint that the company says insulates it from single-country supply-chain disruptions.
The segment's robust top-line growth reflects a recovery in global outdoor apparel orders following the 2023 demand slump. Management noted that while infra constraints and successive minimum-wage hikes in Bangladesh continue to weigh on input costs, the company's large-scale local presence — established since the 1980s — and ongoing investment in productivity yield a structural cost advantage.
SCOTT Segment: Gradual Recovery, Inventory Normalisation Continues
The Swiss premium bicycle brand SCOTT — acquired in 2015 and contributing 30% of consolidated revenue — recorded KRW 267.2 billion in Q1 2026 segment revenue. Management has acknowledged that the post-COVID normalisation of global bicycle demand, particularly in Europe and North America, extended further into 2026 than initially anticipated. Inventory destocking through selective discounting is ongoing, though the company expects the pace of recovery to remain constrained through mid-year.
FX Windfall: The Key Differentiator
Beyond operational improvements, the single largest driver of the pre-tax profit jump was a KRW 58.4 billion net foreign-exchange gain — versus roughly KRW 6.8 billion in Q1 2025 — a swing of approximately KRW 51.6 billion.
The breakdown:
- FX translation gains: KRW 53.5B (vs KRW 17.9B prior year)
- FX transaction gains (net): KRW 9.8B (vs -KRW 3.2B prior year loss)
- Derivative gains (net): KRW 21.9B (vs near-zero prior year)
The Korean won depreciated meaningfully against the US dollar in early 2026 amid ongoing uncertainty over US trade tariffs and domestic political transition. As Youngone earns the bulk of its revenue in USD and holds USD-denominated assets, a weaker won translates directly into translation gains on foreign-currency assets.
Balance Sheet: Asset Base Expands
Total consolidated assets increased to KRW 6,065.2 billion as of March 31, 2026 (vs KRW 5,716.9 billion at end-2025), with equity rising to KRW 4,314.9 billion. Inventory climbed to KRW 1,473.2 billion from KRW 1,224.6 billion, reflecting a build-up likely tied to expanded order intake in the OEM segment and ongoing SCOTT inventory management.
Cash and cash equivalents stood at KRW 826.2 billion, down from KRW 1,090.6 billion at year-end 2025, while short-term financial instruments increased to KRW 682.2 billion from KRW 432.8 billion — suggesting a shift into higher-yielding short-term instruments rather than a reduction in overall liquidity.
Key Risk: FX Reversibility
Investors should note that FX translation gains are non-cash and mark-to-market in nature; a reversal of won depreciation would unwind a portion of the Q1 gains in subsequent quarters. The company's core operating leverage — gross margin expansion from efficiency gains and a higher-value product mix — appears structurally improved, but the headline profit figure is partially inflated by macro FX timing.
Youngone Corp (111770.KS) is listed on the Korea Stock Exchange. This report is based on the Q1 2026 quarterly filing (DART rcept_no: 20260514001455) submitted on May 14, 2026. All figures are consolidated under K-IFRS.
Sources: DART Q1 2026 Filing (rcept_no: 20260514001455) | Youngone Corp IR (111770.KS)
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