Most firms anticipate dent in earnings

Most Korean listed companies are projected to post worse-than-forecast earnings for the third quarter as the global economic slowdown hurts their profitability, data showed yesterday.

Ninety-one of 118 major listed firms said their operating profit outlook had been downgraded from projections made earlier this month, according to data complied by FnGuide.

The data showed 21 respondents revised up their profit projection, but the scope of the upgrade was mostly marginal. Three firms are estimated to have logged an operating loss in the July-September period and the remaining three companies kept their original forecast, according to FnGuide.

The bleak outlook mainly came as Asia’s fourth-largest economy loses steam on weaker exports and sluggish domestic demand, beset by the protracted euro zone debt crisis.

Petrochemical firms, steelmakers, machinery makers and telecommunications companies were cited by analysts as candidates likely to see a sharp deterioration in earnings.

Market leader Samsung Electronics put its Q3 operating profit at a record 8.1 trillion won ($7.36 billion) due to brisk sales of smartphones. Other major exporters, however, including Hyundai Motor, are expected to announce worse-than-forecast bottom lines, analysts say.

Kumho Petrochemical’s operating profit is likely to reach 68.7 billion won, down 68.7 percent from a year earlier, according to the data. Posco is expected to see a 15.6 percent dip to 1.09 trillion won, it added.

Telecommunications companies’ earnings outlook also remained cloudy as their moves to lure subscribers over to the LTE service raised marketing costs, analysts said.

Top mobile carrier SK Telecom’s operating profit may reach 353.6 billion won, down 33.1 percent from the previous year, and top fixed-line operator KT’s bottom line is likely to fall 29.6 percent on-year to 363.6 billion won for the quarter, the data showed.

Korea relies heavily on exports but global economic headwinds led the country’s overseas shipment to post an on-year contraction for the third straight month in September.

Domestic demand also remains subdued as high household debt curbs consumer spending and companies delay big capital investment.

Market watchers added that corporate earnings may recover soon. “As the U.S. and China are estimated to have hit bottom, Korean companies’ earnings are likely to recover in the fourth quarter,” said Kwak Byoung-yeol, an analyst at Eugene Investment & Securities. Yonhap