A Happy Third Quarter

THE business performance of big listed Korean companies in the third quarter are emerging as a positive element for the Korean stock market after recording improvements in performance in the first and second quarters. Their 3Q business performances significantly increased from a year earlier and the second quarter of 2009.

In particular, good performances were seen in the electric, electronics, steel, metal and gas sectors. Samsung Electronics recorded its highest-ever performance in the third quarter. Its sales rose 36 trillion won, 19% up from last year, while its operating profits reached 4.1 trillion won, an increase of 177% from last year.

Its sales and operating profits increased 11% and 63%, respectively from the second quarter of this year.

Samsung Electronics posted nearly one trillion won in operating profits in its four major business sectors; semiconductors, LCDs, cell phones and TVs. Its digital media business, such as TVs and PCs, posted one trillion-plus won in profits for two consecutive quarters. In the third quarter, LG Electronics recorded its highest-ever sales and operating profits for the third quarter in its corporate history.

LG Electronics’ sales in the third quarter dropped 4.1% from the previous quarter All five business divisions of LG Electronics have been posting incomes since the first quarter of 2009. In particular, sales of handsets and LCD TVs hit 30 million units and four million units, respectively, for the first time in its history.

Hyundai Motor has also enjoyed good business performances. Its sales in the third quarter stood at 8.983 trillion won, up 33.8% from a year before. Its operating profits reached 586.7 billion won, up 461% from a year earlier. Its net income stood at 979.1 billion won, an increase of 269.8% from a year before and an increase of 20.6% from the previous quarter.

In 2009, Hyundai Motor recorded total sales of 1,134,368 units between the first and third quarters. In Korea, Hyundai Motor sold 490,182 cars, up 11.3% from a year before thanks to new models and tax exemptions by the government. However, exports dropped 17.4% to 644,186 units due to a slump in the European market.

POSCO recorded one trillion-plus won in operating profits for the first time since the fourth quarter of 2008. POSCO’s steel production in the third quarter hit 7.88 million tons. The steel company recorded 6,851 billion won in sales, an increase of 22.3%.

Manufacturers of electric home appliances and automobiles demanded more steel products. In addition, export prices rose, too. In the third quarter, its operating profit hit 1,018 billion, more than five times its operating profits in the second quarter. POSCO expects the steel market to continue to recover.

Therefore, the steel company projected that it will be able to produce 29.5 million tons of steel and post 27.1 trillion in sales and 3.2 trillion won in operating profits this year. Money-losing Hynix Semiconductor succeeded in going into the black in the third quarter. In the second quarter, the semiconductor manufacturer suffered 211 billion won in losses.

However, in the third quarter, the company enjoyed 209 billion in operating profits. Its sales in the third quarter jumped 26% to 2,118 billion won from a year before, while its net income stood at 246 billion won. The semiconductor market recovered faster than expected, elevating prices of D-RAMs and nand flash memories and increasing shipments.

LC Chem recorded its highest-ever operating profits in the third quarter as well. LG Chem’s sales stood at 4,364.3 billion won, an increase of 9.7% from a year before. Its net income rose 82.8% to 543 billion won. The chemical manufacturer posted 3,073.7 billion won in sales, 655.9 billion won in operating profits and 543 billion won in net income.

Within the Samsung Group, high performers were Samsung Electro-Mechanics and Samsung Engineering. In the third quarter, Samsung Electro-Mechanics posted 1,548.7 billion won in sales, up 30% from the previous quarter. Its operating profits and net income stood at 207 billion won and 123.3 billion won, up 235% and 367%, respectively.

Samsung Engineering’s sales and operating profits rose 21.2% to 1,041.2 billion and 46.4% to 82.1 billion won, respectively. However, Samsung Corp. and Samsung Fine Chemicals saw their sales and net income decrease from the previous quarter.

Construction companies showed some improvements in their business performances. GS Engineering and Construction posted 1,963.8 billion won in sales, an increase of 7.6% from a year before. Its operating profits increased 75.6% to 197.8 billion won from a year before, also.

KT&G, a tobacco producer, showed poor performances in the third quarter due to a stronger Korean won. Its operating profits and net income dropped 22.3% and 17.7% to 217.1 billion won and 167.5 billion won, respectively. Its sales stood at 7,060 billion won, an increase of 9.7% from a year before.

LG Dacom recorded its highest-ever quarterly sales, continuing doubledigit growth for two straight quarters. Its sales in the third quarter stood at 480.9 billion won, an increase of 17% from a year before. LG Telecom posted 1,271.5 billion in sales, up 7.8% from a year before and 11.1 billion won in operating profits, down 9.6% from a year before, respectively.

LG Display posted 5,974 billion in sales, up 22.1% from a year earlier. In particular, the company is expanding its production lines due to an increase in sales thanks to a sharp rise in demand.

Thanks to strong sales of secondary batteries Samsung SDI posted 1,347.4 billion won in sales, up 13.5% from a year earlier and 88.1 billion won in operating profits, up 82% from a year earlier. In particular, its battery business posted 547 billion in sales, an increase of 15% from a year before, and playing a leading role in its growth.

S-Oil suffered losses due to a decrease in margins and a stronger Korean won, although the oil refinery company had been expected to go into the black. S-Oil posted 389.6 and 44 billion in operating profits in the first and second quarters, respectively, but suffered 70.5 billion won in operating losses in the third quarter. However, the company posted 66.7 billion won in net income thanks to foreign-exchange profits. S-Oil posted 4,711.7 billion won in sales, down 32.8% from a year before.

Kia Motor posted 313.4 billion in operating profits, down 5.1% from the previous quarter, but up 483% from a year before. Its sales rose 31.6% to 4,509.3 billion won from a year earlier. The automaker sold 790,000 units from the first to third quarter. Its sales and operating profits hit 12,688.2 billion won and 846.4 billion won, respectively. Its net income reached 846.4 billion won. Kia suffered a decrease of 2.2% in exports. However, its domestic sales increased 26.8%, elevating total sales by 6.8%.

Daewoo International posted 2,800.1 billion won in sales in the third quarter, down 18.8% from a year earlier. Its sales slightly dropped due to a decrease in product prices after the Korean won got stronger and the world economy began to suffer a slump. Oil prices, foreign exchange rates and interest rates are expected to have a big impact on the business performance of Korean firms in the future.