Top 100 Companies to See Record Results Next Year

2010 is expected to be a record year for major Korean corporations in performance, as their global market shares have greatly increased this year because of the “three lows” – low interest rates, oil prices, and value of the Korean won.

According to domestic financial data provider FnGuide yesterday, Korea’s top 100 companies in stock market capitalization (excluding financial institutions) will post a combined operating profit of 62.95 trillion won (53.1 billion U.S. dollars) next year, up 37.1 percent from this year.

Sales will rise 8.4 percent year-on-year to 68.79 billion won (58.03 billion U.S. dollars) next year. Their average ratio of operating profit will jump from 7.2 percent to 9.2 percent over the same period.

Samsung Electronics is expected to post the largest operating profit of 8.71 trillion won (7.34 billion dollars) next year, followed by steel giant POSCO with 4.75 trillion won (four billion dollars); SK Telecom 2.57 trillion won (2.16 billion dollars); Hyundai Motor 2.18 trillion won (1.83 billion dollars); and LG Electronics 2.15 trillion won (1.81 billion dollars).

Samsung Electronics, POSCO, Hyundai Motor, LG Electronics and Hyundai Heavy Industries are predicted to earn more than two trillion won (1.68 billion dollars) in net profit next year. The Korea Electric Power Corp., Hyundai Mobis, LG Chem, SK and others are each expected to earn more than one trillion (843 million dollars) in net profit.

FnGuide said it based its forecast on the assumption that the Korean economy has entered the recovery phase. Skeptics warn, however, that it is premature to say how much consumer spending will recover next year and that rises in raw material prices could offset much of the expected operating profit.

“The Korean won could gradually strengthen but is still weak in its absolute value,” said Seo Myeong-seok, head of research at Tong Yang Securities. “If the won’s weakness and economic recovery continue, corporate profits will likely increase significantly.”

Kim Hak-joo, head of research at Samsung Securities, said, “If the economy recovers, raw material prices could surge because of the abundant liquidity injected into the market.”

artemes@donga.com