Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
POSCO International, Samsung C&T to continue hot streak in 2024 with diversified portfolios
This combined photo shows Samsung C&T's logo in front of its building in Seoul, left, and POSCO International's logo at its headquarters in Incheon. Korea Times files
By Park Jae-hyuk
LX International faces worsening profits amid economic slowdown
Major trading firms in Korea are facing different earnings forecasts, depending on the levels of diversification in their business portfolios, according to securities analysts, Monday.
The market consensus on Samsung C&T’s operating profit last year is around 2.9 trillion won ($2.2 billion), as the company’s fourth-quarter operating profit is estimated at 702.8 billion won, up 10.82 percent from the previous year.
Although the falling steel trading volume appears to have reduced Samsung C&T’s annual operating profit from the trading business by 15 percent year-on-year, analysts saw that the company’s earnings from the construction business would lead its record profit.
Given that Samsung C&T is expected to win additional mega-size orders from Saudi Arabia for infrastructure construction projects in Saudi Arabia's NEOM megaproject, its profitability is highly likely to grow further this year. Lee Jae-eon, who was nominated as president of Samsung C&T’s trading division last November, is also set to improve the division’s earnings through new eco-friendly businesses.
“Based on the solid growth of diversified business portfolios, the company’s fourth-quarter earnings will be satisfactory,” Kyobo Securities analyst Baek Kwang-je said. “Despite the completion of several projects, the construction division’s fourth-quarter profit has also been improved thanks to its growing revenue in other countries.”
POSCO International is another trading firm that has increased its earnings through diversification.
Based on its merger with POSCO Energy last January, the company is presumed to have posted a 1.2 trillion won operating profit for 2023, following its 1.1 trillion won operating profit for 2022.
“Despite the downturn in steel trading, its operating profit is expected to grow thanks to the solid profit from its energy business,” Heungkuk Securities analyst Park Jong-ryul said.
The analyst expects the company’s 2024 operating profit to fall 2.3 percent year-on-year, due to its aggressive investments. However, he anticipated a maximization of POSCO International’s operating profit after 2025.
In contrast to Samsung C&T and POSCO International, LX International’s yearly operating profit is thought to have been halved last year to 442.3 billion won, according to the market consensus.
The company was once expected to be another trading firm posting over 1 trillion won in annual operating profit, as its operating profit reached 965.5 billion won in 2022. However, the falling raw material prices and freight rates have reduced its earnings.
“Its recent investments in mines may provide some momentum, but it is unlikely to see tangible results in the near future, considering the weak prices and the U.S. regulations,” Hana Securities analyst Yoo Jae-sun said.
Mirae Asset Securities analyst Ryu Je-hyun also lowered its outlook for LX International’s 2023 and 2024 operating profits by 7.6 percent.