Third-quarter earnings are coming up short

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Third-quarter earnings are coming up short

About half of listed companies have announced third-quarter earnings, with 70 percent falling short of analysts’ expectations.

According to FnGuide, a financial information provider, 40 of 67 listed companies that announced quarterly earnings by Friday saw operating profits plunge compared to last year.

Of those, 28 companies posted third quarter operating profits of about 10 percent less than forecasts.

The sum of the operating profits of the 67 companies, 14.38 trillion won ($13.39 billion), was 20.7 percent lower than the 18.13 trillion won estimated by securities firms.

Hyundai Heavy Industries (HHI) saw the biggest variance from estimates.

Brokerage firms projected HHI would post a 132.5 billion won operating loss. However, the company announced a loss of 1.9 trillion won.

The decline of the global shipping industry and postponement of major projects were the main causes of HHI’s worse-than-expected performance.

The company blamed construction delays of two power plant projects in Saudi Arabia for a loss of 592.2 billion won.

Affiliates such as Hyundai Mipo Dockyard and Hyundai Samho Heavy Industries also suffered losses that experts say are due to contracts at prices that were too low.

While most of the reporting companies performed below projections, 27 companies did far better.

For example SK Innovation was expected to post an operating profit of 12.7 billion won. Recent falling crude prices were considered a negative factor for the energy company. However, it turns out its operating profit for the July-September period was 48.8 billion won.

Other companies that showed similar results were CJ Freshway, SK Networks, Samsung Engineering, Hankook Tire, Kumho Petrochemical and Samsung C&T.

Although most of the companies were suffering from worse-than-expected third-quarter performances, stock values have been moving up.

Samsung Electronics, which reported about 4 trillion won in third-quarter earnings on Thursday, saw its shares rally.

Hyundai Motor, which announced its worst earnings since the fourth quarter of 2010 on Oct. 23, saw a 5.88 percent increase in its share price the same day.

Securities firms say the rising stock prices reflect expectations that these companies will increase their dividends.


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