Last Quarter Earnings 'Plummet'... Concerns Over Earnings Shock

[Asia Economy Reporter Koh Hyung-kwang] As Samsung Electronics leads the way with the full-scale announcement of last year's fourth-quarter earnings this week, concerns over an 'earnings shock' are growing as earnings estimates for major domestic companies continue to deteriorate.

According to financial information provider FnGuide on the 7th, the operating profit estimates for the fourth quarter of last year for 225 companies, each with earnings estimates from three or more securities firms, totaled 27.4117 trillion won. This is an 11.1% decrease from the estimate three months ago (30.8114 trillion won) and a 1.8% decrease compared to the estimate one month ago (27.9149 trillion won).

Among these companies, 138 companies, accounting for 61.3% of the total, had their fourth-quarter operating profit estimates revised downward over the past three months.

Among listed companies with operating profits exceeding 10 billion won, Samsung SDI saw the largest decrease in estimates. Three months ago, Samsung SDI's fourth-quarter operating profit was expected to reach 279.2 billion won. However, recently, that figure has sharply dropped by 89.6% to 29.1 billion won. This is analyzed to be due to a surge in one-time costs caused by energy storage system (ESS) fire accidents.

Leading companies in their sectors such as Hyundai Steel (267.6 billion won → 90.1 billion won), Korean Air (105 billion won → 47.8 billion won), and LG Chem (444.7 billion won → 235.8 billion won) also saw their estimates lowered by between 47% and 66% compared to three months ago.

All four companies expected to have quarterly operating profits exceeding 1 trillion won?Samsung Electronics (7.0237 trillion won → 6.5821 trillion won), SK (1.1877 trillion won → 1.1103 trillion won), Hyundai Motor (1.1768 trillion won → 1.0944 trillion won), and POSCO (1.0907 trillion won → 921.1 billion won)?were revised downward by 6% to 15% compared to three months ago.

Compared to three months ago, large corporations expected to see an increase in operating profit are few, including Kia Motors (513.2 billion won → 554.9 billion won), Naver (221.8 billion won → 238.3 billion won), and KT (164.7 billion won → 176.4 billion won), with increases of only about 6% to 8%.

Dong Il-rak, a researcher at Daishin Securities, diagnosed, "The trend of declining operating profits for domestic companies that began at the end of 2018 is expected to continue into the fourth quarter of last year. The decrease in operating profit is not so much due to one-time costs but reflects an economic slowdown, which is more worrisome going forward."

This content was produced with the assistance of AI translation services.