Falling Profitability
Hyundai Motor Company announced on January 26 that its operating profit decreased 19.2% from a year ago to 1.5151 trillion won in the last quarter of 2015 and it recorded 6.3579 trillion won in operating profit last year. The annual operating profit showed a decrease of 15.8% from a year earlier to reach the lowest level since 2010, when the amount totaled 5.9185 trillion won.
Still, the automaker hit an all-time high in quarterly sales in the fourth quarter of 2015 by recording 24.7648 trillion won. Its annual sales increased 3% compared to the previous year to 91.9588 trillion won, too. It sold no less than 4,963,023 cars around the world in 2015 but the rapid depreciation of the currencies of emerging countries affected the profitability of its manufacturing facilities abroad.
The Hyundai Motor Group is likely to face a bumpy road ahead this year, too. The group said that it is aiming to sell a total of 8.13 million vehicles in 2016, 70,000 less than a year ago. According to the Korea Automotive Research Institute, the global vehicle sales volume is estimated at 88.5 million this year, up only 2.9% year on year. The growth rate was as high as 4.2% between 2014 and 2015.
In the meantime, SK Hynix said that it recorded 18.798 trillion won in sales and 5.336 trillion won in operating profit last year to reach new highs for the third consecutive year. Nevertheless, its operating profit for the fourth quarter totaled 988.9 billion won, falling short of one trillion won for eight quarters in a row. The quarterly profit fell 29% from the previous quarter and 41% from a year ago due to a decline in semiconductor demand and is unlikely to recover in the first quarter of this year for seasonal factors.
LG Electronics showed a negative growth in sales and operating profit alike. Specifically, the annual sales fell approximately 4% to 56.509 trillion won while the operating profit decreased 35% to 1.1923 trillion won. Fortunately for the company, though, its Q4 sales and profit rose by 4% and 19% from the previous quarter to 14.5601 trillion won and 349 billion won. The figures fell 5% and rose about 27% year on year, respectively.
LG Display posted 60.6 billion won in operating profit in Q4, 2015 to show a year-on-year decline of 90.3%. The sales fell 10.1% to 7.4957 trillion won during the same period. Samsung Electronics’ Q4 profit was 6.1 trillion won with the profit growth rate falling for the first time in five quarters due to drops in semiconductor and LCD panel prices. Samsung SDI recorded an operating loss of 80.8 billion won in Q4, 2015 and the quarterly profit of Samsung Electro-Mechanics, which announces its earnings on January 29, is forecast to be less than the market estimate of 40 billion won. POSCO is expected to show the first loss in its history at the earnings announcement scheduled for January 28.
These poor performances of the leading Korean enterprises have to do with the slowdown of the global economy. Last year, China’s economic growth rate stood at 6.9%. More recently, the IMF adjusted its global economic growth forecast from 3.6% to 3.4%. According to market research firm SNE Research, the global TV sales volume is likely to grow merely 1.8% to 233 million units this year although TV manufacturers are planning to raise their combined sales volume to at least 259 million units by making use of major international sports events.