Won Evaporation
The combined operating profits of 102 listed Korean companies that announced their profits for the second quarter were found to be approximately 3 trillion won (US$2.9 billion) less than securities firms’ average estimate.
In particular, five that had been expected to be profitable showed an unexpected loss. Three others showed much increased losses. A total of 64 companies came up with less-than-expected business profits. Meanwhile, 37 surpassed expectations.
According to financial information provider FnGuide, the total operating profits of the 102 companies that announced their quarterly performance until August 11 were 21.8909 trillion won (US$21.3038 billion). Local securities firms’ consensus for them, which was announced early last month, was 24.8128 trillion won (US$24.0970 billion).
NHN Entertainment, Korean Air, Hyundai Heavy Industries, SK Innovation, and S-Oil showed particularly poor performances. The five companies’ combined profits had been estimated at 423.4 billion won (US$411.2 million), but turned out to be 1.2359 trillion won (US$1.2002 billion) in the red.
Hyundai Heavy Industries posted a loss of 1.1037 trillion won (US$1.0715 billion), instead of the expected 37.5 billion won (US$36.5 million) in profits. “The earnings shock can be attributed to the delay of the progress of major shipbuilding and offshore plant construction projects, which resulted in an investment loss of 500 billion won,” said KB Investment and Securities research analyst Lee Sang-won, adding, “The 250.6 billion won loss of Hyundai Mipo Shipyard added to it.”
SK Innovation recorded a loss of 50.3 billion won (US$48.8 million) instead of a profit of 239.1 billion won (US$232.4 million), as all of the business units had a sluggish quarter, with the only exception being the lubricant manufacturing division. The oil refining business unit showed a loss of 214.9 billion won (US$208.6 million) due to the appreciation of the won and a decreased diesel crack spread.
KT, which is in the middle of large-scale restructuring, increased its losses from 707.6 billion won (US$687.6 million) to 813 billion won (US$789 million). Hyundai Mipo Shipyard and Doosan Engine increased their own losses from 59.8 billion won (US$58.1 million) to 250.6 billion won (US$243.2 million), and from 9.8 billion won (US$9.5 million) to 12.9 billion won (US$12.5 million), respectively. The difference between the estimate and the actual figure was -97 percent for S-MAC, -85 percent for Hyundai Rotem, -83 percent for Asiana Airlines, -81 percent for INNOX, -74 percent for CJ CGV, and -71 percent for Samsung Electro-Mechanics.
In contrast, Hanjin Shipping recorded a profit of 29 billion won (US$28.1 million), 1,077 percent of the 2.5 billion won (US$2.4 million) estimate. “The international fuel price fell 5, percent and the company’s fuel consumption dropped significantly,” Meritz Securities analyst Kim Seung-chul explained, continuing, “Its efforts for cost reduction and profitability improved paid off, too.”