Net Profit of South Korean Listed Firms Plunges in First Half of 2021


By Kim Na-young

SEOUL, Aug. 17 (Yonhap) — The consolidated net profit of 615 companies listed on the main KOSPI bourse drastically decreased in the first half of 2021, according to the Korea Exchange (KRX). The figure was 37.7 trillion won (US$28.1 billion), which is nearly 58 percent lower than the 89.6 trillion won during the same period last year.

This is the largest decrease since the KRX was established in 2005. Sales rose 2.28 percent on-year to 1.4 quadrillion won, but operating profit declined 52.45 percent to 53.1 trillion won. Of the 615 firms, 469 posted net profit and 146 posted net loss.

Excluding market leader Samsung Electronics Co. and the state-run Korea Electric Power Corp., the remaining companies’ net profit and operating profit dropped 47.14 percent and 38.37 percent, respectively. The debt ratio of the firms inched up 0.06 percentage point to 112.69 percent.

“Corporate earnings peaked in 2021 and turned to a downward trend since last year as external conditions exacerbated due to conflict between the United States and China, and other factors,” Moon Jong-yeol, economic research head of the Korea Listed Companies Association, said. Exports are sluggish due to the worse-than-expected economic slowdown of China and cost burden, Moon added.

By industry, electronics logged the biggest drop in net profit, followed by transport and warehousing, paper and wood, service and chemical. Machinery was one of the few industries that saw an increase in net profit.

The net profit of 1,112 companies listed on the tech-heavy KOSDAQ bourse fell 41.4 percent on-year to 4.1 trillion won. Their sales rose 5.2 percent to 136.1 trillion won, but operating profit retreated 36.1 percent to 5.6 trillion won. By sector, the internet and technology saw a 76.4 percent drop in net profit, while manufacturing saw a 32.1 percent drop in net profit. The IT sector’s sales decreased 7.2 percent, but manufacturing’s sales increased 12.7 percent. Of the 1,112 firms, 674 were in the black and 438 were in the red.

Experts say corporate performance will likely improve later than expected amid a slow recovery of the Chinese economy and sluggish exports. South Korea’s exports fell for the 10th consecutive month in July due mainly to weak demand for semiconductors, though it reported a trade surplus for two straight months. But the country continued to log a trade deficit with China last month.

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