Large Corporations' Operating Profit Hit Bottom in Q4 Last Year... Gradual Recovery Expected in First Half

CEO Score Top 500 Companies Q2 Earnings Survey
Automobile and Shipbuilding Performance Improves... IT and Electronics Down 21 Trillion Won

Operating profits of major domestic conglomerates hit bottom in the fourth quarter of last year and showed a gradual recovery in the first half of this year. Operating profits in the automobile & parts, shipbuilding, machinery & equipment sectors improved.

On the 15th, CEO Score, a corporate data research institute, announced the second-quarter operating profits of 305 companies out of the top 500 companies by sales that submitted their semi-annual reports by the previous day. According to the survey, second-quarter operating profits amounted to KRW 23.3404 trillion, down 55.5% from the same period last year. It decreased by 6.7% compared to the previous quarter.

After setting a record high of KRW 52.3947 trillion in the second quarter of last year, operating profits sharply declined to KRW 37.9211 trillion in the third quarter and KRW 11.2676 trillion in the fourth quarter, then increased to KRW 25.0253 trillion in the first quarter of this year. The second quarter also maintained a gradual recovery trend.

Second-quarter sales were recorded at KRW 666.361 trillion, down 5.2% from the same period last year.

By industry, the IT electrical and electronics sector saw the largest decrease in operating profits. The IT electrical and electronics sector recorded operating profits of KRW 20.6535 trillion in the second quarter of last year but posted an operating loss of KRW 6.954 billion in the second quarter of this year, a sharp drop of KRW 21.3489 trillion. This is attributed to the semiconductor industry's downturn since the second half of last year, which significantly reduced operating profits of companies such as Samsung Electronics and SK Hynix.

The petrochemical sector also saw a large decrease in operating profits (-KRW 10.3238 trillion, down 90.0%). Transportation (-KRW 3.2239 trillion, down 67.4%), steel (-KRW 897.8 billion, down 51.5%), construction & building materials (-KRW 556 billion, down 25.2%), and pharmaceuticals (-KRW 354.5 billion, down 39.8%) followed.

Among profitable sectors, the automobile & parts sector had the largest increase in operating profits. It rose by KRW 3.3623 trillion (52.7%) from KRW 6.3792 trillion in the second quarter of last year to KRW 9.7415 trillion in the second quarter of this year.

Shipbuilding, machinery & equipment (KRW 1.3011 trillion, up 212.7%), energy (KRW 200.7 billion, up 45.2%), and telecommunications (KRW 160.4 billion, up 13.7%) also saw increases in operating profits. The public enterprise sector improved its deficit by KRW 3.5881 trillion compared to the same period last year due to electricity rate hikes and other factors.

View of Samsung Seocho Building in Seocho-gu, Seoul.
[Photo by Hyunmin Kim kimhyun81@]

By company, Samsung Electronics experienced the largest decrease in operating profits. Operating profits plunged by KRW 13.4285 trillion (95.3%) from KRW 14.097 trillion in the second quarter of last year to KRW 668.5 billion in the second quarter of this year. SK Hynix posted an operating loss of KRW 2.8821 trillion as its second-quarter operating profits decreased by KRW 7.0747 trillion compared to the same period last year (KRW 4.1926 trillion).

Other companies with significant decreases in operating profits include HMM (-KRW 2.7769 trillion, down 94.5%), GS Caltex (-KRW 2.1513 trillion, turned to loss), SK Energy (-KRW 2.0834 trillion, turned to loss), S-OIL (-KRW 1.6856 trillion, down 97.9%), HD Hyundai Oilbank (-KRW 1.3341 trillion, down 97.4%), and Korea Hydro & Nuclear Power (-KRW 754.2 billion, increased loss).

Hyundai Motor Company and Kia Yangjae Headquarters.
[Photo by Asia Economy DB]

Among profitable companies, the largest increases in operating profits were recorded by Hyundai Motor (KRW 1.2581 trillion, up 42.2%), Kia (KRW 1.169 trillion, up 52.3%), Samsung Heavy Industries (KRW 314.7 billion, turned to profit), LG Energy Solution (KRW 265 billion, up 135.5%), and Hyundai Mobis (KRW 260.4 billion, up 64.6%).

Deficits at Korea Electric Power Corporation and SK On decreased compared to last year. Their operating profits in the second quarter of this year increased by KRW 4.244 trillion and KRW 194.5 billion, respectively, compared to the same period last year.

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