1 in 3 listed companies report earnings shock in 3rd quarter

While most publicly listed companies have reported their third-quarter earnings, one in three posted an earnings shock, with their operating profits falling more than 10 percent below market expectations, a report showed Sunday.

Market tracker FnGuide reported that 165 companies listed on the KOSPI and Kosdaq — each with earnings forecasts from three or more securities firms — have released their third-quarter results as of Thursday.

Of these, 102 companies, or 61.8 percent, reported operating profits that were below the market consensus, either turning to losses or experiencing a widening of their losses.

In particular, 57 companies, or 34.6 percent, reported operating profits that fell more than 10 percent below the market forecast.

The company with the largest discrepancy between reported earnings and forecasts was Simmtech, a manufacturer of printed circuit boards for semiconductors and communication devices.

Securities firms had anticipated an operating profit of 12.4 billion won ($8.86 million) for the company, but the actual reported operating profit was only 500 million won, falling 95.9 percent short of expectations.

“Customer orders for the firm began to decline in mid-August and are currently still weak, making it likely that operating losses will be unavoidable until the first half of next year,” Hana Securities analyst Kim Rok-ho said.

POSCO FutureM, which was expected to report an operating profit of 18.7 billion won, announced an operating profit of only 1.4 billion won, resulting in a disparate ratio of minus 92.7 percent.

Multiple semiconductor and related equipment companies, such as Samsung Electronics, Wonik Materials and Haesung DS, also reported results that fell 14.7 percent, 33.7 percent and 42.4 percent below market expectations, respectively.

LG Chem and Samsung SDI both reported earnings that were 4.5 percent and 5 percent below expectations, respectively, highlighting the underperformance of secondary battery-related companies.

On the other hand, 63 listed companies, or 38.2 percent, exceeded market expectations, with 36 achieving an earnings surprise of more than 10 percent above forecasts.

Kakao Games reported an operating profit of 5.7 billion won, nearly 15 times higher than the consensus of 400 million won.

Companies such as Wonik IPS, Hyundai Livart and Amorepacific also posted strong earnings, exceeding market expectations by 91.3 percent, 76.5 percent and 51.7 percent, respectively.

The total operating profits of the listed companies for the third quarter were 47.23 trillion won, 5.8 percent below the forecast of 50.14 trillion won. This aligns with sluggish economic conditions, as the domestic GDP growth rate for the third quarter was only 0.1 percent compared to the previous quarter.

“Production, consumption and investment are all showing signs of stagnation or slowdown,” Heungkuk Securities analyst Kim Jin-seong said. “While export demand for key industries like semiconductors remains steady, it is not expanding. There is a need for demand recovery to spread beyond the IT sector.”

Kiwoom Securities analyst Han Ji-young noted, “There has been considerable disappointment with the third-quarter earnings season, but from a short-term perspective, it would be worth paying attention to sectors such as utilities, shipbuilding, securities and cosmetics, where profit momentum is actually improving.”