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Listed firms’ earnings likely to fall more than 10% in Q2

(Yonhap)
(Yonhap)

Despite better-than-expected performance in the first quarter, South Korea’s major listed firms are likely to see their earnings dip due to the prolonged export slump caused by the coronavirus pandemic, a local financial market tracker said Sunday.

The combined operating profit of 138 listed companies is estimated at 19.97 trillion won ($16.3 billion) for the April-June period this year, down 2.34 trillion won, or 10.5 percent, from a year earlier, according to data compiled by FN Guide.

The recent projection is down 26.71 percent from the outlook suggested three months ago, and 19.12 percent from a month ago.

Hit by weak demand and production disruptions globally, their sales and net profit are expected to fall by 8.44 percent and 17.50 percent, to reach 318.91 trillion won and 14.55 trillion won, respectively.

The earnings of market bellwether Samsung Electronics are estimated at around 7.2 trillion won, down 13 percent from the prior month’s projection of 8.27 trillion won. LG Display, Jeju Air, Hana Tour and CJ CGV are all expected to widen deficits from their earlier estimates.

Of the listed firms, only 25 are expected to see their earnings climb from a month earlier. The list includes biotech company Seegene, Daewoo Shipbuilding & Marine Engineering, Nongshim and SK hynix.

Oil refineries and travel industries -- S-Oil, SK Innovation, Hotel Shilla and Paradise Group -- are likely to run into the red in the second quarter, as result of the epidemic spread and the consequent quarantines.

The country’s outbound shipments in April came to $36.9 billion, plunging 24.3 percent from a year earlier and with a trade deficit for the first time in 99 months since January 2012, according to the Ministry of Trade, Industry and Energy.

“As over 80 percent of corporate profits depend on exports, an export slump will be difficult to overcome, even if the US and Europe slowly reopen their borders,” said Jung Yong-taek, a senior researcher at IBK Securities.

“The operating profit of firms will hit a low point in the second quarter, before recovering in the second half of the year.”

By Jie Ye-eun (yeeun@heraldcorp.com)
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