Listed company profits plunged in the first quarter

Korean Air planes are still grounded at Incheon International Airport as overseas travel is still limited due to the coronavirus pandemic. Profits for airlines declined sharply in the first quarter of this year. [YONHAP]

Listed Korean companies barely grew in the first quarter, while profits plunged, according to a report from the Korea Exchange and the Korea Listed Companies Association.

The study of 592 companies that report in December, excluding financial firms, found that revenue grew only 0.9 percent to 495.3 trillion won ($404 billion) in the first quarter. Operating profit fell 31.2 percent to 19.5 trillion won, and net profit declined 47.8 percent to 11.3 trillion won.

The operating profit margins for the companies dropped to 3.93 percent, down 1.83 percentage points, and the net profit margins came in at 2.23 percent, down 2.08 percentage points.

When Samsung Electronics, the country's largest company by market capitalization, is removed from the equation, the picture looks even more gloomy.

The operating profit of the 591 companies shrank 41 percent to 13.3 trillion won, while net profit tumbled 61.8 percent to 6.1 trillion won. The operating profit margin without Samsung Electronics fell to 2.96 percent, down from 5.03 percent. The net profit margin fell to 1.4 percent, down from 3.67 percent.

In the first quarter, Samsung Electronics reported a 3.4 percent increase in its operating profit to 6.45 trillion won, while net profit fell 3.2 percent year-on-year to 4.88 trillion won.

Among the companies, 411, or 69 percent, reported a profit, while 181 companies, or 30.6 percent, reported losses.

For service companies, net profit was down 75.7 percent, while the net profit at retailers declined 39 percent. Net profit for electric and electronics companies declined 2.9 percent.

The 85 chemical companies including refiners reported a net loss of 1.67 trillion won in the first three months of this year. This compared with 2.46 trillion won in net profit a year earlier. SK Innovation, which reported a 1.56 trillion won net loss, and S-Oil, which suffered an 880 billion won net loss, reported the biggest losses.

The 22 transportation and storage companies, which includes airlines, reported 1.72 trillion won in net losses. Korean Air Lines lost 731.8 trillion and Asiana Airlines 652.1 billion won. Jeju Air reported net losses of 101 billion.

Revenue for the 944 companies listed companies on the Kosdaq rose 6.71 percent to 47.2 trillion won. Operating profit fell 22.88 percent year-on-year to 1.76 trillion won, while net profit declined 35.17 percent to 1.76 trillion won.

While 59.75 percent, or 564 companies, reported a profit, 380 companies, or 40.25 percent, reported losses. A total of 17.9 percent of the companies, or 169, swung from loss to profit.

In the case of the Kosdaq, IT software companies fared relatively well, with operating profit increasing 16.11 percent, while revenue for IT hardware companies declined 12.8 percent.

The larger concern is the second quarter, as the hardship is seen continuing due to the protracted recovery from the virus.

“The first-quarter performances, which were expected to be the beginning of an economic recovery, have continued a profit decline due to the Covid-19 shock,” said Kim Min-gyu, an analyst at KB Securities. “The current consensus is that the current path of profit decline will continue throughout the second quarter.“

On Wednesday, the Korea Development Institute (KDI) will be announcing its revision on the Korean economic growth for this year, which many expect to be a significant cut. The KDI late last year projected the country’s GDP growth for this year at 2.3 percent.

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