Korean Inc. to see Q2 profitability worsen as to U.S., Japan peers

[Photo by MK DB]

South Korean listed companies are expected to see their profitability worsen considerably in the second quarter than those of their peers in the U.S., Japan, Taiwan, and China, as they remain more vulnerable to external environments such as interest rate hikes and global economic slowdown.

According to Bloomberg and NH Investment & Securities Co. on Monday, listed companies on the main Kospi are projected to see a 40.7 percent decline in their operating profit for the second quarter from the same period a year ago. The brokerage consensus showed that their revenues are projected to go up by 0.2 percent during the same period.

The lowered estimate comes as memory chips continue to face a slump and the secondary battery sector sees slow improvement in profitability due to facility investment burden.

Listed companies engaged in transportation and energy businesses that posted strong first-quarter earnings are also seeing their profit slow in the second quarter.

Korean rivals in the U.S., Japan, Taiwan, and Europe, on the other hand, are performing better.

Major U.S. companies on the S&P 500 are projected to see a 0.2 percent increase in net profit in the second quarter despite a 7.5 percent fall in sales.

The combined operating profit of Japanese Topix-listed companies is expected to go down by 7.8 percent in the second quarter, which is only one-fifth of the decline of Korean companies.

“Korea is home to memory, automobile, and petrochemical stocks that are more sensitive to the global economy,” said an unnamed official from the financial investment industry.

“Countries like the U.S., Taiwan, and Japan have many big tech platforms and non-memory chip companies that have relatively stable profit,” the official added.

Data showed that companies listed on Europe’s STOXX 600 are projected to see their second-quarter net profit fall by 0.9 percent while those listed on China’s CSI 300 increase by 15 percent.