Direct Hit from COVID-19... Trading Companies' Gloomy Report Card for Q2

LG Sangsa and Samsung C&T Trading Divisions' Q2 Operating Profit Halved

"All Business Divisions Underperform... Performance Slowdown Inevitable in Second Half"

[Asia Economy Reporter Kim Ji-hee] Domestic general trading companies received a gloomy report card in the second quarter as they were directly hit by the novel coronavirus disease (COVID-19).

According to the industry on the 25th, LG Corporation's operating profit in the second quarter of this year recorded 30.2 billion KRW, a 40.3% decrease compared to the same period last year. Due to the spread of COVID-19 and the resulting contraction in global trade, sales during the same period also decreased by 11.8% to 2.3073 trillion KRW. It is explained that the decline in trading volume and the downturn in the coal market affected the poor performance.

Earlier, Samsung C&T's trading division also announced an operating profit that shrank to about half compared to the same period last year. The sales and operating profit of the trading division in the second quarter were 3.017 trillion KRW and 13 billion KRW, respectively. These figures represent a sharp decline of 15.4% and 51.9% compared to the same period last year. The best performing company was POSCO International. POSCO International's operating profit in the second quarter was 134.4 billion KRW, a 25.3% decrease compared to the same period last year.

While the general trading industry was unable to avoid the shock of COVID-19 in the second quarter, the outlook for the second half of the year is also not positive.

Kim Dong-yang, a researcher at NH Investment & Securities, said, “LG Corporation has been disposing of idle assets and repurchasing its own shares since April due to the stock price decline caused by poor performance, but the trading and energy divisions, excluding logistics, are experiencing worsening sluggishness due to COVID-19,” adding, “It is expected to maintain an operating profit of around 30 billion KRW per quarter in the second half of the year.”

Park Jong-ryeol, an analyst at Hyundai Motor Securities, said, “Although POSCO International recorded operating profit in line with the initial forecast in the second quarter, operating profit significantly decreased due to the sluggishness in all business divisions including the Myanmar gas field, trading, trade, and investment corporations,” and predicted, “In the second half of the year, the overall performance momentum slowdown is inevitable due to the global economic slowdown and decrease in trade volume.”

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