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Kospi firms’ Q1 profit growth hints at recovery

Market analysts say restructuring, healthy exports drove gains

May 17,2017
Another sign of steady recovery in Korea’s economy emerged Tuesday when the Korea Exchange revealed that profit at companies listed on the local stock market improved significantly during the first quarter.

The combined revenue of 536 companies listed on the benchmark index, the Kospi, rose 8.35 percent from last year’s first quarter to total 455.6 trillion won ($410 billion). Operating profit rose 25.34 percent to 38.9 trillion won, and net profit surged 35.77 percent to 32.2 trillion won.

The figures are a stark contrast to a year ago, when the combined revenue of listed companies barely changed in the first quarter, only inching up 0.24 percent from 2015.

“Revenue and operating profit at listed companies rose significantly, largely led by IT companies including Samsung Electronics and SK Hynix,” said Cho Yoon-ho, head of the Kospi market department at the Korea Exchange. “We are seeing it as a signal of economic recovery.”

The contributions of Samsung Electronics and SK Hynix, two of the world’s largest memory chip manufacturers, remain influential on the index. Samsung’s operating profit accounted for 25.45 percent of all operating profit and SK Hynix 6.34 percent.

All in all, the operating profit of the Kospi’s top 10 companies accounted for more than half of the combined operating profit, 56.39 percent or 21.9 trillion won, indicating the dominance of conglomerates in the index’s performance. Their net profit made up 54.99 percent.

When excluding heavyweight Samsung Electronics, though, companies still performed strongly in the first quarter. Revenue without Samsung Electronics was 405 trillion won in the first three months of the year, a 9.27 percent increase from a year ago. Operating profit rose 19.05 percent to 29 trillion won, and net profit rose 32.78 percent to 24.5 trillion won.

Companies that saw net profit accounted for 79.47 percent, or 426 companies, on the index, while those that reported net losses amounted to 110.

Market analysts have pointed to restructuring efforts at companies and recent double-digit growth in Korea’s exports as major contributors to the improvement.

By industry, 15 saw revenue expand. Medical precision firms’ revenue rose at the sharpest rate, 32.5 percent, followed by steel and metal with 23 percent, chemicals with 17.8 percent, services with 16 percent and electronics with 12.61 percent.


BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]







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