Samsung leads top 4 groups in sales, operating profit

Korea`s top conglomerate Samsung Group has sales and operating profit more than twice as much as those of the remaining top three -- Hyundai-Kia Automotive, SK and LG.

Former Hyundai executives, however, have shown the best performance after they take over other companies.

SK has the most former and current executives graduating from Korea’s top three universities - Seoul National, Korea and Yonsei - with 54.3 percent. By contrast, Hyundai has the largest share of executives graduating from provincial universities with 33 percent.

These are the results of an in-depth analysis by The Dong-A Ilbo of the 2009 performance of Korea’s top four conglomerates, that of CEOs who worked for the four, and their academic backgrounds. The study was based on the National Information and Credit Evaluation’s database on 400,000 business people and a survey of 17,422 companies subject to external audits every year and with more than 10 billion won (8.9 million U.S. dollars) in assets.

○ LG CEOs outperform Samsung`s

Samsung led the pack with 359.11 trillion won (321 billion U.S. dollars) in assets, 220.67 trillion won (197.5 billion dollars) in sales, 16.56 trillion won (14.9 billion dollars) in operating profit, and 18.26 trillion won (16.4 billion dollars) in net profit. The group`s sales and operating profit were two to four times larger than those of the remaining three conglomerates.

Samsung’s assets were 200 trillion won (179 billion dollars) more than those of its three rivals. The gap widened because Hyundai-Kia, SK and LG were divided into various companies in the wake of the Asian-wide financial crisis of the late 1990s while Samsung maintained its main business sectors.

Samsung produced 133 CEOs, the largest among the top four business groups, followed by LG with 79, SK 73 and Hyundai-Kia 55.

The revenue of companies run by CEOs formerly from Samsung was an average 355.3 billion won (318 million dollars), three times the average of all companies subject to the survey of 115 billion won (103 million dollars). Their average net profit of 12.5 billion won (11.2 million dollars) was also three times the entire average of 4.1 billion won (3.7 million dollars).

CEOs hailing from Hyundai-Kia performed better than those from Samsung, however, earning 1.92 trillion won (1.72 billion dollars) in sales and 170.9 billion won (153 million dollars) in net profit on average.

The Hyundai CEOs` stellar performance was attributable to differences in business type. Of 55 CEOs from Hyundai, 31 worked in manufacturing but 133 CEOs from Samsung were spread out in other sectors, with 39 in IT, 29 in manufacturing, 20 in construction, and 19 in distribution.

In 2009, most financial businesses were hit hard by the global financial crisis that erupted in late 2008. In contrast, Korean manufacturing, especially the automotive sector in which former Hyundai-Kia executives serve as CEOs, made rapid progress by making the most of the relative sluggishness of U.S. and Japanese automakers.

LG CEOs also posted outstanding achievements. Seventy-nine former LG executives were company heads in various sectors, with 20 in IT, 12 in distribution, another 12 in manufacturing, and 11 in consumer goods. Their average sales (668.2 billion won or 598.2 million dollars) and net profit (48.2 billion won or 43.2 million dollars), however, were two to four times larger than those of CEOs from Samsung.

The gap was partly due to the difference in the number of CEOs working in the financial industry. The number of financial sector CEOs hailing from LG was eight, or a meager 0.8 percent of all 989 CEOs in the sector. By contrast, 1.3 percent of CEOs in the sector or 12 were former Samsung executives.

Though the difference in the number of CEOs in the financial sector was small, the sector played the most significant role among the eight sectors in achieving a combined 474 trillion won (424 billion dollars) in sales.

○ SK attracts best and brightest

SK Group produced the largest number of former and current executives graduating from Korea’s top 3 universities of Seoul National, Korea and Yonsei. Of 1,482 former and current executives, 54.3 percent graduated from the three schools.

LG ranked second with 43.5 percent, followed by Samsung with 35.7 percent and Hyundai with 29.2 percent.

Hyundai had the most CEOs hailing from provincial universities with 33 percent and SK had the fewest with 16.9 percent.

Of 6,131 former and current executives among the four conglomerates, Kyunggi High School in Seoul produced 261 of them (4.2 percent), followed by Seoul High School with 213 and Kyung Bock High School with 206.

sanhkim@donga.com kimhs@donga.com