South Korea’s top 10 business groups reportedly have lost nearly 800 billion won (US$754 million) this year owing to a strong won. As a result, there is growing concern that a continuing downward trend in exchange rate may hamper the nation’s economic recovery on account of exporters’ worsening profitability.
According to data on profits and losses in currency exchange compiled by chaebul.com on November 25, net foreign exchange losses of 83 listed affiliates of the country’s top 10 conglomerates (state-owned enterprises and financial companies excluded) amounted to 760 billion won (US$725 million) from January to September in 2013. Those subsidiaries earned 15.993 trillion won (US$15.080 billion), but lost 16.753 trillion won (US$15.797 billion) because of the drop in the exchange rate. Considering that net foreign exchange gains of the top 10 business groups totaled 957 billion won (US$902 million) during the same period last year, their losses actually ballooned to 1.7170 trillion won (US$1.6190 billion) within a year.
Among the top 10 conglomerates, Samsung Group saw its net foreign exchange losses increasing from 171 billion won (US$161 million) last year to 289 billion won (US$273 million) this year. Hyundai Motor Group witnessed 244 billion won (US$230 million) of its net foreign exchange gains in 2012 being reversed to 219 billion won (US$206 million) of losses in 2013.
SK Group and LG Group were not exceptions. SK’s 118 billion won (US$111 million) in net foreign exchange gains in the cited period turned into 201 billion won (US$189 million) of losses in the period, while LG hopelessly watched 90 billion won (US$85 million) in profits last year convert into 282 billion won (US$266 million) in losses this year. Hyundai Heavy Industries is the only company to post 96 billion won (US$90 million) of gains in 2013 from 1 billion won (US$942,907) of net foreign exchange losses in 2012.
In particular, Samsung Electronics' net foreign-exchange losses more than doubled within one year, recording 271 billion won (US$255 million) this year from 132.3 billion won (US$124 million) last year. The company’s losses in January-September 2013 were the biggest among 83 listed subsidiaries. LG Electronics suffered the next biggest losses (258.8 billion won, US$), followed by SK Hynix (141.8 billion won, US$133 million), Hyundai Motors (94.9 billion won, US$89.5 million), SK Innovation (49.8 billion won, US$47.0 million), Hyundai Engineering & Construction (46.6 billion won, US$43.9 million), Hyundai Mobis (42.7 billion won, US$40.2 million), and Samsung SDI (40.7 billion won, US$38.4 million).