Net Profit of Listed Companies Dropped by 35%

It was revealed that operational performance of domestic companies has worsened markedly in the first half (Jan-June) of this year.

Along with an overall economic recession, bad news such as the Iraq war, SARS (Severe Acute Respiratory Disease), the North Korean nuclear issue and credit card loan delinquency have led to significant reduction in profit and revenue compared to the same period last year.

The Stock Exchange announced on Aug.18 that according to the study on the first half performances of 526 list companies that have closed the books in December, the total net profit went down by 35.5% from the same period last year, marking only 12.6233trillion won.

The operational profit also decreased by 22.6% to 17.8617trillion won and the revenue decreased as well by 0.9% from the first half of last year to 235.4073trillion won.

Companies listed on KOSDAQ posted an even poorer performance. According to KOSDAQ, the net profits of 772 registered companies in the first half of the year recorded only 158.8billion won, which is 90.3% decrease from the same period last year.

Both operational profit (951.2billion won) and ordinary profit (563billion won) have decreased by 62.0% and 73.5% respectively.

In case of listed manufacturing industries, some industries such as automobile, shipbuilding and steel, saw improvements in their performances, but in general, with worsened profit of the semiconductor industry and sluggish recovery in the IT sector, its overall revenue marked 210.7625trillion won, which is 1.9% decrease from the first half of last year. Net profit decreased by 19.6%, marking only 13.4863trillion won.

With this, the ratio of operating profits to net sale of manufacturing industry remained at 8.70%, which is 0.38% lower than the level in the first half of last year. It means that the industry scored only 87won out of 1000won as a profit. The ratio of operating ratio in the fist half of last year was 9.10%.

With credit card companies going into the red and a surge in loan delinquency, allowance for bad debt in this sector increased drastically. Due to this, the listed financial industry was directly struck by the sluggish domestic consumption that it posted 863.1billion won of deficit.

With sluggish performance this year, 65 listed companies that were profitable in the first half of last year turned into the red.

Professor Park, Won-am of Hongik University said, “it is true that there are hopes about economic recovery in the latter half but no one can be sure whether it will continue in the long term,” and he added, “policies that cause disruptions in the businesses can lead to inactive investment.”

Kang-Woon Lee Mi-Kyung Jung kwoon90@donga.com mickey@donga.com