KOSPI Listed Companies Until Q3: "Sold at 1,000 Won, Barely Gained 54 Won"

[Asia Economy Reporter Lee Seon-ae] Based on cumulative performance from Q1 to Q3 this year, the size of KOSPI-listed companies has grown, but profits have sharply declined, indicating a hollow business with no real gains. Although sales and operating profits increased, net profits decreased, and both operating profit margin and net profit margin fell, meaning the actual money companies hold has decreased. The market has evaluated that from Q3 onward, companies have entered a 'profit decline cycle' with performance starting to drop significantly. In fact, the Q3 report card is the first point reflecting all negative factors such as the sharp rise in the won-dollar exchange rate, increased raw material prices, rising labor costs, and soaring interest expenses.

According to the '2022 Q3 and Q4 Financial Results of December Fiscal Year-End Listed Companies on the KOSPI Market' compiled by the Korea Exchange and the Korea Listed Companies Association on the 16th, among 680 KOSPI-listed companies with December fiscal year-end, excluding 79 companies not analyzed, the cumulative consolidated sales of 601 companies reached KRW 2,084.0233 trillion, a 24.51% increase compared to the same period last year.

However, cumulative operating profit was KRW 146.2452 trillion, an increase of KRW 1.4457 trillion (1.00%) from the previous year. On the other hand, net profit was KRW 113.2192 trillion, a decrease of KRW 15.947 trillion (12.35%).

The net profit margin, which shows the proportion of net profit to sales, fell from 7.72% in the same period last year to 5.43%, a decrease of 2.28 percentage points. The operating profit margin also decreased by 1.63 percentage points from 8.65% to 7.02%.

If a company sold goods worth KRW 1,000, a year ago it earned KRW 86.5 before taxes and ended up with KRW 77.2 in hand, but in Q3 this year, selling the same amount earned KRW 70.2, meaning only KRW 54.3 was pocketed.

Excluding Samsung Electronics, the company with the largest market capitalization, profit margins slightly declined. Excluding Samsung Electronics, operating profit margin and net profit margin were 5.79% and 4.39%, down 1.49 and 2.41 percentage points respectively from the previous year.

However, excluding Korea Electric Power Corporation (KEPCO), which posted the largest operating loss in history, the results improve somewhat. Excluding KEPCO, consolidated sales increased by 24.78%, operating profit by 15.18%, and net profit decreased slightly by 0.67%. KEPCO's cumulative operating loss through Q3 reached KRW 21.8342 trillion due to the ongoing energy crisis.

Looking at Q3 performance alone, the downward trend is more pronounced. Sales increased by 3.46% to KRW 726.0327 trillion compared to the previous year, but operating profit (KRW 39.3666 trillion) decreased by 30.35%, and net profit (KRW 27.6733 trillion) fell by 37.04%.

For Q3, companies earning KRW 1,000 in sales ultimately pocketed only KRW 38.1 in net profit margin, which is KRW 24.5 lower than in Q2.

By industry, operating profits increased in five sectors including pharmaceuticals and construction, while operating profits decreased in 12 sectors such as steel and metals. Only two sectors, including medical precision instruments, saw net profit increases, while the remaining 15 sectors recorded profit declines. The electricity and gas sector, including KEPCO, was hit the hardest, and steel and metals, chemicals, textiles and apparel, non-metallic minerals, and electrical and electronics sectors recorded net profit decreases of over 20%.

Among listed companies, four out of five (483 companies, 80.37%) recorded net profit surpluses in Q1 to Q3, while 118 companies (19.63%) were in deficit. Looking at Q3 alone, 448 companies (74.54%) were profitable, and 153 companies (25.45%) posted losses.

Due to worsening performance, debt ratios increased. At the end of Q3, the debt ratio of KOSPI-listed companies was 12.09%, up 3.70 percentage points from the end of last year. Total liabilities amounted to KRW 2,155.2615 trillion, an increase of KRW 286.2976 trillion (15.32%) compared to the end of last year.

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