Alarm spreads as most top Korean firms stagnate
Published: 16 Aug. 2023, 17:31
The warnings came from a comparative analysis of first-half interim reports for 2022 and 2023 filed by the 10 biggest companies in Korea by asset value.
Of the 10 companies, Hyundai Motor and HD Korea Shipbuilding & Offshore Engineering (HD KSOE) were the only two firms where sales, operating profit and employee figures grew between June 2022 and June 2023. The pair along with Hanwha Solutions were the only companies that saw increased sales and operating profits.
Samsung Electronics, LG Electronics and GS Caltex saw both sales and operating profit shrink in the first half compared to a year ago. SK Innovation, Posco Holdings, Lotte Shopping and Emart saw either sales or operating profit plunge over the cited period.
Korea’s market bellwether Samsung Electronics suffered the steepest sales drop with a 20.1 percent decline. Chemical firm GS Caltex followed with a 17.3 percent dip after enjoying record-high profits last year on the back of soaring refining margins.
Samsung Electronics also logged the biggest fall in operating profit, minus 95.3 percent, followed by SK Innovation and GS Caltex with 93.2 percent and 91 percent decreases.
These firms’ main businesses — semiconductors, oil refinery and petrochemical — were Korea’s best-selling export sectors in 2022 but were weighed down by the perfect storm of a downturn in the chip cycle, sliding oil prices, supply glut from China and weak demand brewing at the same time.
The auto and shipbuilding industry put up a fair fight, with Hyundai Motor raising sales by 20.7 percent and operating profit by 59.5 percent to become the highest-earning listed company for the first time.
HD KSOE’s sales jumped 27.1 percent during the 12 months and achieved a turnaround in operating profit on steady growth from eco-friendly vessel orders.
LG Electronics fostered its automotive electronics division to offset losses from home appliances but was unable to increase sales, operating profit and employee numbers. Solar energy and petrochemical company Hanwha Solutions managed to improve sales and operating profit but on a marginal scale.
Retailers Lotte Shopping and Emart are yet to develop a future growth engine. Their sales, profit and employment figures remained largely unchanged in recent years.
Weak growth among major conglomerates, namely the largest employers, could hamper economic growth moving forward. Samsung Electronics hired 6,166 new employees over the period and was the only big name to hire more than 1,000 workers.
“Effects of China’s reopening and a rebound in chips that would spur positive outlooks are not showing,” according to Cho Kyung-yup, head of the economic research department at the Korea Economic Research Institute. “Key industries are likely to continue to face challenges.”
“Recruitment size was smaller-than-expected even when performances were decent across the board,” an industry source said. “There will not be many companies expanding their hires for the time being because traditional industry leaders are at a low growth point."
BY LEE HEE-KWON [sohn.dongjoo@joongang.co.kr]
with the Korea JoongAng Daily
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