Listed Companies Post Small Increase in Net Income for Third Quarter

For the third quarter of this year (July-September), sales of domestic corporations have decreased while profits, including net income, have gone up. This seems to be the result of management focusing on profit rather than appearances, and the combined influence of “export improvement-domestic demand stagnation.”

According to the Korea Stock Exchange and the Korea Listed Companies Association on November 17, the third quarter (July-September) net income for 519 corporations settling their annual accounts in December stood at 6.4886 trillion won, which is a 3.19 percent increase from the same period last year, and a 3.91 percent increase from this year’s second quarter (April-June). Operating profit jumped 14.33 percent from the second quarter, standing at 8.7005 trillion won.

However, as domestic demands continue to dwindle, sales from the third quarter stood at 114.5402 trillion won, a 3.95 percent decrease from the same period last year, and a 2.41 percent drop from the second quarter this year.

Kosdaq-listed companies also showed a decrease in outward forms and an improvement in profit indicators such as net income. The net incomes of IT corporations, which have high export rates, especially showed a distinct increase.

Moreover, according to the Kosdaq Stock Market, though the sales of 709 listed corporations settling accounts in December totaled 13.8255 trillion won, showing a 1.9 percent decrease from the second quarter, the net income for the year stood at 457.2 billion won, jumping by 59.6 percent. Compared to the second quarter, operating profits increased 8.5 percent to 639.8 billion won and ordinary income up by 17.8 percent to 549.5 billion won

Reflecting the conflicting differences in exports and domestic demands, the manufacturing and financial businesses posted contrary results.

Manufacturing corporations of the Korea Stock Exchange posted a mere 102.191 trillion won in sales for the third quarter, which is a 5.30 percent drop from the same period of the previous year. However, net income increased 30.27 percent to 7.996 trillion won.

On the other hand, sales for the financial industry increased 8.95 percent to 12.3492 trillion won, while net loss was at 611.1 billion won as allowance for bad debts greatly increased due to the increase of insolvency regarding loans to corporations and individuals.

The ratio of operating profit to sales for the manufacturing industry increased 0.48 percent from the same period last year to 8.47 percent. This means that a sale worth 1,000 won earned a profit of 84.7 won.

Meanwhile, 77 of the corporations that posted surplus for last year’s third quarter turned around to post deficits, while 59 corporations posted deficit from surplus. 311 corporations maintained surplus, while 72 continued to have deficits.

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