9 Korean firms join W1,000,000,000,000 profit club
By Jhoo Dong-chan
Nine Korean firms joined the 1 trillion won ($879 million) profit club in the first quarter of this year.
They are Samsung Electronics, SK hynix, POSCO, Shinhan Financial Group, Hyundai Motor, LG Display, SK Innovation, Korea Electric Power Corp. (KEPCO), and SK C&C. This compares to a year earlier when only four firms joined the exclusive club.
“Typically, the first quarter has been the slow season in business circles,” said futures trader Lee Sang-hoon, who formerly worked as an analyst at Daishin Securities.
“Still, nine firms reported more than a 1 trillion won operating profit in the first quarter, hinting a promising year for the nine firms if the trend continues.”
Samsung Electronics, a longtime member of the 1 trillion won club, reported an operating profit of 9.89 trillion won in the January-March period, the highest quarterly profit since the third quarter of 2013.
The tech giant experiences leadership vacuum as Chairman Lee Kun-hee is hospitalized while his only son, Vice Chairman Lee Jae-yong, its de facto leader and Samsung Group heir, is behind bars. He was imprisoned on bribery charges related to a political scandal which led to the impeachment of President Park Geun-hye.
However, the world’s largest memory chipmaker showed impressive performances thanks to a chip boom.
Among the aforementioned nine, LG Display reported the largest surge in operating profit.
It only reported a 39.5 billion won operating profit in the first quarter of 2016, but the figure skyrocketed to 1.02 trillion won this year.
SK Innovation, which saw a great deal of growth in its chemical business sector, chalked up a 1 trillion won operating profit in the first quarter this year, up 18.9 percent from a year earlier.
The country’s top-tier chemical company topped 1 trillion won in quarterly profit for the first time since 2011. Experts say SK Innovation’s proactive investments in its chemical and lubricant sector finally started paying off.
SK Innovation has invested nearly 5 trillion won over the last five years _ 1.6 trillion won for the Incheon production facilities, 1.2 trillion won for its Chinese petrochemical affiliate and 480 billion won for its Ulsan aromatics facilities.
Up to 454.7 billion won of operating profit came from the newly built Incheon production lines.
Shinhan Financial Group also saw an operating profit of 1.29 trillion won. Its net profit was 997.1 billion won.
The group’s earnings were surprising because its representative business, Shinhan Bank, saw a decline in net profit by 7 percent to 523.5 billion won, but its other businesses such as Shinhan Card and Shinhan Investment Corp. enjoyed surge in earnings.
Shinhan Card racked up a 410.8 billion won net profit, a 170 percent jump year-on-year, while Shinhan Investment Corp. had 46 billion won, also up by 111 percent from a year ago.
Hyundai Motor suffered a 6.8 percent drop in operating profit in the period.
The nation’s largest carmaker reported an operating profit of 1.25 trillion won, down by 6.8 percent from the previous year’s 1.34 trillion won.
Hyundai’s lackluster performance in operating profit is attributable to its loss in the Chinese market since Beijing came up with retaliatory measures after the deployment of a U.S. anti-missile shield here.
Hyundai Motor and its affiliate Kia Motors sold 72,032 cars in China in March, down 52.2 percent from the year before. Hyundai Motor sold 56,026, down 44.3 percent, and Kia Motors 16,006, down 68 percent.
Hyundai Motor also saw its China sales skid 64 percent to 35,009 vehicles in April from the year before while its sister brand Kia Motors also reported a sales decline of 68 percent to 16,050 vehicles in the period.
Yet, the carmaker is expected to get back on track in the not-so-distant future based on its technological edge and brand power.
KEPCO posted 2.46 trillion won in operating profit, which is a substantial drop from last year’s 3.61 trillion won. The utility was expected to suffer the diminishing profits due to the decrease in electricity prices and the rise of liquefied natural gas prices.
In addition, the operating ratio of nuclear reactors went down to weigh on the former state monopoly. However, the ratio, which was around 80 percent in the first quarter, is predicted to keep rising throughout this year to 87 percent in the fourth quarter.
SK C&C maintained its operating profit at 1.5 trillion won.