Business Performance in the First Quarter

Major Korean corporations posted mixed performances in the first quarter depending on which industry they are in.

Corporations in the oil refining, shipbuilding and airline industries were categorized as “A” with their highest ever records, while those in the chemicals, steel and textile business fell into “B” group with modest performances. Companies in the semiconductor, display and automobile industries were in “C” group, failing to overcome a sluggish market.

Big smile for oil refineries and shipbuilders-

Each of the major oil refineries posted a huge profit amounting to hundreds of billions of won in the first quarter alone, thanks to a booming market.

SK Corp. recorded 476.1 billion won of operating profit, up 44 percent from the same period last year, which is the highest-ever quarterly record in its history. S-Oil posted 395.9 billion won of operating profit, a 79-percent year-on-year increase, the highest-ever first-quarter record in its history.

Experts say that such a remarkable performance is attributable to the booming global market for petrochemicals and lubricants, and to the increasing profits from overseas oil field development.

The shipbuilding industry also enjoyed growing profits, as they built high-price ships over the period.

DSME recorded 141.5 billion won of operating losses in the first quarter of last year. But it turned its performance around over the first three months of this year, posting 50.3 billion won of operating profit, the best performance among the ”big three” shipbuilders in the country. Samsung Heavy Industries showed 76.5 billion won of operating profit equaling 387 percent year-on-year growth.

The airline industry also posted unexpected high growth despite high oil prices thanks to increasing demand for overseas travel.

Chemical, textile and steel businesses also fared well, posting higher-than-expected profits.

LG Chem posted 126.9 billion won of operating profits, up 93.6 percent year-on-year, due to the strong growth of its petrochemical sector, including the improvement of its PVC business. POSCO recorded 5.701 trillion won of sales and 1.113 trillion won of operating profit, 5.4 percent and 1.5 percent year-on-year growth, respectively.

Gloomy semiconductor, display and automobile industries-

The semiconductor and display industries showed poor performances due to plunging product prices.

Semiconductor sales at Samsung Electronics decreased 17 percent from the previous quarter to 4.48 trillion won, while its operating profit dropped as much as 68 percent to 540 billion won.

In the display industry, LG-Phillips LCD posted 208 billion won in operating losses and 169 billion won in net losses, a poorer record than last year’s 52 billion won of operating loss and 48 billion won of net profit. Samsung SDI recorded its first operating loss of 110.2 billion won since the fourth quarter of 2004 (-392 billion won).

The main reason for the sluggish performance of semiconductor and display sectors is falling prices. DRAM saw its price drop significantly due to seasonality in the PC market, while the price of the NAND flash memory was almost halved.

Among automakers, the market leader Hyundai Motor recorded 6.6841 trillion won in sales and 291.4 billion won of operating profits, a 2.6 percent and 13.1 percent year-on-year drop, largely due to decreasing sales.

higgledy@donga.com