Listed firms hit record 1st-half profits

The combined net profits of companies listed on the Korea Stock Exchange that close their books at the end of December exceeded 10 trillion won for this year¡¯s first half, recording the largest-ever figure. Firms listed on the Kosdaq market also were revealed to have enjoyed the briskest-ever business conditions with their combined net profits soaring 81% year-on-year to 745.6 billion won. However, some issues to be resolved were detected, including a severe profit concentration phenomenon and deteriorating profit-on-sales among venture firms listed on the Kosdaq.

The KSE and the Korea Listed Companies Association announced Wednesday that out of 572 listed firms that close books in December, the combined net profits of 446 firms, excluding firms under court receivership and financial companies, reached 10.4 trillion won (about US$9.45 billion) in the first half of this year, up 34.7% from 7.72 trillion won registered in the previous year. When 17 firms from the banking and the financial sectors are included, the first-half net profits increased to 11.55 trillion won (US$10.5 billion).

The combined turnover of the listed firms during the period posted a year-on-year gain of 21.7% to 233.1 trillion won (US$211.9 billion), while the combined operating income and recurring income rose 46.7% and 31.3% respectively. The average debt-to-equity ratio showed a decline of 41% to 135.9% from 176.9% over a year earlier.

Reason for good performance:

When excluding the financial firms, the listed firms closing their books in December reaped 44.6 won of net profit on every 1,000 won of sales in the first six months of this year. The good performance largely was boosted by enhanced profitability as a result of corporate restructuring efforts, amidst brisk domestic shipment and exports.

The listed firms¡¯ operating income on sales was much improved, registering 8.4% during the period from 6.4% of the previous year, encouraged by reduced SG&A expenses and cost-price ratio. The sustained low interest rates also contributed to lower financial expenses to sales to 4.3%, down 1.7 percentage point from the previous year, which has resulted in improving the profit structures.

By industry, growth in turnover of the semiconductor and information-communication sectors was most outstanding. With bullish domestic demand and exports, the energy and automobiles industries also saw a remarkable growth in sales.

Deepening profit concentration:

What was notable was that the concentration of net profits among firms has deepened. The combined net profits of the big four companies -- Samsung Electronics, SK Telecom, Korea Telecom and Korea Electric Power Corp. -- in the first half of this year recorded 5.29 trillion won (US$4.8 billion) with a whopping 122% growth over a year earlier. The figure accounts for 50.9% of total net profits of all the listed firms closing books in December.

By sector, food and beverage, paper, semiconductors, automobiles and telecom businesses enjoyed improvement in profitability, whereas textiles, garments, cement, machinery, shipbuilding, construction and shipping industries suffered from weakened profitability.