2nd half outlook bleak for Korea Inc.
Companies across industries reeling from sharp pullback in profit, data shows
By Lee Hyo-sik
Things will likely go from bad to worse for most listed firms here in the latter half of this year as the global economic downturn continues to further dampen business performances.
Shipbuilders, refiners, steelmakers and other large companies are widely expected to post sluggish results in the third quarter in line with falling demand for made-in-Korea products both at home and abroad.
Only a handful of information technology and automobile manufacturers, including Samsung Electronics, Hyundai Motor and Kia Motors, will likely achieve anything worthwhile in the second half, thanks to improving competitiveness and rising market shares.
According to online stock information provider FN Guide, Wednesday, the third-quarter earnings outlook for 75 major listed firms of the total 105 has been downgraded from the projection made in April.
In contrast, the remaining 30 firms are expected to post larger operating income for the July to September period.
By industry, POSCO, LG Chem and 14 other materials firms are now forecast to post combined operating income of 3.2 trillion won in the third quarter, down 20.5 percent from an earlier estimate of 4 trillion won made in April. An outlook for their fourth-quarter operating earnings also fell 14.8 percent.
SK Innovation and four other energy firms are predicted to post 19.3 percent less operating income, while the third-quarter earnings outlook for four telecommunications service providers and 32 industrial materials producers has been downgraded by 15.6 and 7.4 percent, respectively.
By company, the third-quarter operating income for Dongkuk Steel is estimated to be 11.8 billion won, a drop of 77 percent from April’s projection of 51.7 billion won.
LG Electronics, the country’s second-largest electronics maker, is forecast to post earnings of 268.3 billion won, down 12.7 percent from an earlier estimate.
``Besides Samsung Electronics, Hyundai Motor and Kia Motors, most listed firms here suffered an earnings shock in the second quarter. Things will not be much different in the third quarter,’’ Kyobo Securities analyst Kim Hyung-ryoul said. ``Securities firms have downgraded third-quarter earnings forecasts for most listed companies. But I think they should come down more.’’
Kim said Korean exporters have coped well with the European debt crisis and other external negatives. But they have recently begun feeling the pinch as the economic malaise gripping advanced countries has spread to China and other emerging economies.
The country’s outbound shipments fell 8.8 percent in July from the previous year, the steepest decline since September 2009.
``Business conditions will likely further deteriorate for Korea Inc. toward the year’s end. But some companies, such as Samsung Electronics, will likely be immune to this prevailing trend and post an even more bullish performance down the road,’’ the analyst said.
According to FN Guide, the world’s largest handset marker is projected to earn operating income of 7.63 trillion won in the July-September period, up 19.7 percent from the previous estimate, on the back of strong demand for its smartphones, tablet PCs and other electronics products.
Hyundai Motor is also expected to perform better by earning operating earnings of 2.26 trillion won, up 4.82 percent from the April forecast. Its sister firm Kia Motors will see operating income of 1.12 trillion won in the third quarter, up 10.4 percent from an earlier estimate.