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Posting a Sharp Rise in Net Profits
Listed companies on the Korean stock market enjoyed a significant increase in net income in 2009
Posting a Sharp Rise in Net Profits
  • By matthew
  • April 15, 2010, 16:15
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The net incomes of 565 companies listed on the Seoul Bourse rose 58% in 2009 from a year earlier thanks to gains from foreign exchange rates and the valuation of investments using the equity method of accounting. Although their revenue decreased slightly, their total revenue reached 880.8 trillion won, a drop of 0.27% from a year earlier, their total operating profits jumped by 2.3% to 55.6 trillion won.

High performers were mainly companies in the manufacturing, construction and service industries. Their sales and operating profits increased 1.1% and 4.1%, respectively, while their net profit growth rate reached 70.8%. The foreign exchange rate stayed higher than before the crisis, with exporting companies enjoying an improvement in their performances. Furthermore, the foreign exchange rate stayed stable last year. These factors increased foreign currency-related profits for those firms.

However, financial companies saw their sales and operating profits drop 18% and 13.3%, respectively. By business sector, electronic companies marked good business performances due to strong demand for memory chips and an increase in demand for IT products such as smartphones in addition to positive effects from foreign exchange rates.

The transportation equipment sector posted a 50% increase in net profit thanks to a boom in the automobile sector supported by strong exports and government policies to promote the automobile industry. Meanwhile, thanks to stability in foreign exchange rates, losses were decreased in the electricity and gas industry, helping companies such as Korea Electric Power Corp.

However, some industries struggled, proving that the economy did not fully recover. The transportation and warehousing sectors suffered losses due to a slump in the shipping industry, while the steel and metal sectors suffered sharp drops in operating profits, as did the construction and machinery sectors. Of the 565 listed firms, 465 companies or 82.3% went into the black, with 100 companies or 17.7% suffering losses. I In 2008, 71.6% of them generated net incomes while 28.4% went into the red.

The subsidiaries of the ten biggest business groups in Korea posted 476 trillion won in sales in 2009, up 3.48% from 2008, with their net incomes rising 36.90% to KRW 31.6 trillion won. The net incomes of Hyundai Motor, GS, Lotte, LG and Samsung Groups rose a great deal, while those of POSCO, Hyundai Heavy Industries and the SK Group fell. The Hanjin and Kumho Asiana Groups also continued to suffer losses.

On the other hand, sales of 859 companies listed on the KOSDAQ soared 5.48% to 77,146.6 billion won in 2009, up from 73, 135.7 billion won in 2008. In addition, their operating profits decreased 0.76% to 4,163.2 billion won from 4,195.3 billion won in 2008. Furthermore, their net incomes went into the black by recording 2,321.8 billion won, a jump of 901.8 billion won from 2008. The government’s policies and stable foreign exchange rates contributed to these companies improvement in business performances.

In particular, sales and operating profits of 847 non-financial companies rose 5.55% and 0.04%, respectively. Their net income stood at 2,398.7 billion won. Therefore, they went into the black from the red of 2008. This is because companies in the manufacturing, service and construction industries improved their business performances and their non-operating incomes increased. 258 venture companies enjoyed an increase of 9.97% in sales, while general companies saw a 4.67% increase in sales.