7 of top 10 Korean conglomerates see earnings fall in H1

PHOTO: 7 of top 10 Korean conglomerates see earnings fall in H1

Seven of the 10 biggest business groups in Korea saw a contraction in profits or widening losses in the first half on a year-on-year basis, apparently hit by weaker price competitiveness in exports due to the cheap Japanese currency.

According to the Korea Listed Companies Association, 79 publicly traded units owned by the 10 major conglomerates saw their collective operating profit come to 24.3 trillion won ($21.1 billion) during the first half, down 4.1 per cent from 25.3 trillion won in the same period last year.

Hyundai Motor Group saw the biggest overall drop, in contrast with the second-largest conglomerate's noteworthy performance along with Samsung Group last year.

The operating profit of Hyundai Motor Group's listed units fell by 18 per cent to 5.1 trillion won. Its two automaker brands ― Hyundai Motor and Kia Motors ― saw their earnings plunge 28 per cent and 9 per cent, respectively.

Research analysts say the yen's weaker position against major currencies hurt the automakers' overseas sales due to competition from Japanese companies. They also cited lackluster domestic demand for Korean-made automobiles.

The group's auto-parts maker Hyundai Mobis reported a drop of 9.7 per cent. Further, its steelmaking units ― Hyundai Steel and Hyundai Hysco ― posted falls of 36.8 per cent and 23.6 per cent, respectively.

GS Group fell into the red with combined losses of 299.3 billion won for its four listed operations due to a huge deficit reported by its construction unit.

Though all of its three retail units including GS Home Shopping posted operating profit, GS Engineering & Construction incurred 688.7 billion won in losses.

Hanjin Group saw its operating losses snowball to 295.9 billion won in the first half compared to 124.7 billion won a year earlier as its subsidiaries Korean Air and Hanjin Shipping reported a deficit.

Sectors such as shipbuilding, chemicals and petrochemicals also reported sagging performance.

Hyundai Heavy Industries' three units reaped 461.3 billion won in earnings, down 52.2 per cent from 965.5 billion won, and POSCO Group reported a fall of 19.1 per cent to 1.4 trillion won.

Earnings of SK and Hanwha groups declined 19.1 per cent and 37.8 per cent, respectively.

In contrast, Samsung Group units logged 12.3 trillion won in its first-half earnings, up 17.9 per cent on-year. The group makes up nearly half of all subsidiaries of the top 10 major conglomerates.

Samsung Electronics reported profit growth of 38.3 per cent on the back of robust sales of smartphones and semiconductors.

Samsung Electro-Mechanics posted 43.9 per cent growth, followed by Samsung Heavy Industries with 24.6 per cent and Samsung Techwin with 22.3 per cent.

LG Group and Lotte Group recorded earnings growth of 26.6 per cent and 6.8 per cent.

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