Seoul Bourse Shows More Leaning on IT Sector

South Korea's major KOSPI-listed companies enjoyed a record-breaking performance in the first half of this year, showing a double-digit growth in terms of both operating profit and net profit.

According to the Korea Stock Exchange (KRX) and the Korea Listed Companies Association on August 16, the combined sales of the nation's 533 KOSPI-listed companies which submitted their consolidated financial statements for last year, excluding financial companies, totaled 910.14 trillion won (US$798.37 billion), up 8.2 percent from the same period a year ago. Their combined operating profit also rose 19.19 percent to 78.19 trillion won (US$68.59 billion), while their combined net profit increased 24.44 percent to 60.69 trillion won (US$53.23 billion), recording “earning surprise.” The figures marked the highest results far exceeding the previous best mark of the second half of last year. In particular, Samsung Electronics, which gained benefits from “the global semiconductor boom,” showed a significant performance improvement.

However, the combined sales, excluding Samsung Electronics, went up as low as 7.85 percent to 798.59 trillion won (US$700.52 billion). The combined operating profit and net profit, excluding Samsung Electronics, also rose 6.79 percent and 11.36 percent to 54.23 trillion won (US$47.57 billion) and 41.95 trillion won (US$36.8 billion), respectively.

In addition, the combined operating profit of the nation’s top 10 companies, including Samsung Electronics, stood at 45.83 trillion won (US$40.2 billion), accounting for 58.61 percent of the market. In short, some conglomerates still take up more than half the total.

Out of the 533 KOSPI-listed companies, 438 firms’ net profit went into the black, while the other 95 companies posted a deficit. Notably, the number of companies which went back into the red amounted to 46, while that of companies which were back into the black totaled 38. The debt ratio of the 533 KOSPI-listed companies was 110.9 percent as of the end of June, down 3.96 percent points from the end of last year.

By industry, the eight sectors such as electric & electronics, machinery and nonmetallic minerals, saw their net profit dramatically increase, while the nine sectors including transportation equipment, construction, food and beverage, electro gas and chemicals, saw their net profit decrease. The electric and electronics sectors showed a whopping 203.48 percent increase from the same period a year earlier, posting the highest growth.

However, some said only some large IT stocks had a dramatic growth. As domestic IT shares, such as semiconductors and smartphones, cut a conspicuous figure, Samsung Electronics and SK Hynix posted an operating profit increase of 13.65 trillion won (US$11.97 billion) compared to the same period a year ago. The figure is higher than 12.59 trillion won (S$11.05 billion) of the combined operating profit increase of KOSPI-listed companies. It means other items, excluding the two, posted a minus growth in terms of operating profit.

Taking a look at the second quarter alone, the combined net profit dropped 8.14 percent from the previous quarter. Therefore, some industry sources say whether the huge downward trend is now being set. This quarter’s operating profit margin and net profit margin decreased 0.05 percent point and 0.67 percent, respectively, over the same period.

Meanwhile, the operating profit and net profit of 43 companies in the financial sector also grew 45.73 percent and 26.75 percent, respectively. In detail, banks’ operating profit increased 38.95 percent, while securities firms’ operating profit rose 72.89 percent.

KOSDAQ-listed companies also showed a growth in terms of both size and profitability. the combined sales of the nation's 744 KOSDAQ-listed companies which submitted their consolidated financial statements for last year totaled 75.62 trillion won (US$66.33 billion), up 11.39 percent from a year ago. Their combined operating profit also rose 22.64 percent to 4.61 trillion won (US$4.05 billion), while their combined net profit increased 44.82 percent to 3.55 trillion won (US$3.12billion). An official from the KRX said, “With the global economy picking up, domestic companies showed a significant improvement in performance.”