Korean major firms see sharp decline in Q1 OP due to chip industry downturn

[Photo by Yonhap]

Big companies in South Korea posted a nearly 50 percent drop in operating profits in the first quarter of this year versus a year earlier mainly due to poor business in the semiconductor industry that takes up 20 percent of the country’s total exports.

According to CEO Score, a corporate management information provider, operating profits for the first quarter of this year totaled 25.89 trillion won ($19.4 billion), down 48.8 percent from the same period last year. The data is based on information available for 309 out of the top 500 Korean companies in terms of revenue for the previous year.

The total sales of the surveyed companies amounted to 700.76 trillion won, reflecting a 6.8 percent increase from 656.45 trillion won a year ago. Among the 19 industry sectors surveyed, 11 sectors experienced a decline in operating profits, while eight sectors saw an increase.

In particular, the IT and electronics industry saw the largest drop in operating profit. The industry generated an operating profit of 20.94 trillion won in the first quarter of last year but slipped into an operating loss of 794.1 billion won in the first quarter of this year.

In contrast, the automobile and parts industry posted an operating profit of 7.96 trillion won in the first quarter, up 81.6 percent from 4.38 trillion won a year ago.

The largest increase in revenue also came from the automotive and parts industry. The industry generated 100.34 trillion won in revenue in the first quarter, up by 20.66 trillion won from the same period last year.

By company, Samsung Electronics Co. and SK hynix Inc. had the largest year-on-year decreases in operating profit in the first quarter.

Samsung’s operating profit plummeted 95.5 percent on-year to 640.2 billion won in the first quarter, the lowest in 14 years since 590 billion won tallied for the first quarter of 2009. SK hynix swung into the red with an operating loss of 3.4 trillion won in the quarter.

The largest increase in operating profit came from Hyundai Motor Co. Hyundai Motor reported an operating profit of 3.59 trillion won in the first quarter of this year, up 1.66 trillion won, or 86.3 percent, from the same period a year earlier.