"Post-COVID, Korean Companies' Earnings Recovery Rate Higher Than US and Japan"

KCCI Releases Comparative Report on Business Performance of Leading Companies by Industry in Korea, US, and Japan

[Asia Economy Reporter Changhwan Lee] An analysis has emerged showing that South Korean companies have experienced a stronger performance recovery after COVID-19 compared to companies in the United States and Japan.

On the 27th, the Korea Employers Federation released a comparative report on the business performance of representative companies by industry in Korea, the U.S., and Japan before and after COVID-19. The report stated that among the three countries, South Korean representative companies showed the most favorable performance on average up to the first half of 2021 compared to the first half of 2019, before the pandemic.

The industries analyzed include automotive, distribution, semiconductors, pharmaceutical bio, steel, petroleum refining, telecommunications, and internet services. Representative companies in each industry were selected based on the top companies by country in the 2020 Global Fortune 500 list and the highest revenue companies listed by industry in each country.

By industry, in 2020, all three countries saw a significant deterioration in the business performance of representative companies in traditional manufacturing sectors such as automotive, steel, and petroleum refining. In contrast, companies in internet services, pharmaceutical bio, and semiconductor sectors continued to grow. In the first half of this year, all industries showed improved business performance compared to the same period last year.

During the COVID-19 situation in 2020, South Korean representative companies showed better business performance compared to those in the U.S. and Japan. In the first half of this year, the U.S. showed a remarkable recovery. Comparing the first half of 2019 to the first half of 2021, South Korea had the highest sales growth rate, while Japanese representative companies experienced negative growth.

Comparing the business performance of six major industries?automotive, steel, petroleum refining, pharmaceutical bio, distribution, and telecommunications?among Korea, the U.S., and Japan, South Korea recorded the highest business performance in 2020 (sales growth rate of 4.6%, operating profit margin of 6.5%) among the three countries. It also showed favorable results in the first half of this year (sales growth rate of 15.9% year-on-year, operating profit margin of 11.6%).

The U.S., which had the lowest sales growth rate (-9.9%) and operating profit margin (3.6%) among the three countries in 2020, saw a significant improvement in business performance in the first half of 2021 (sales growth rate of 33.9%, operating profit margin of 15.0%).

When comparing to pre-COVID-19 levels, South Korea had the highest sales growth rate (30.8%) from the first half of 2019 to the first half of 2021, while Japanese representative companies experienced negative sales growth.

Japan’s sales decreased by 1.1% from the first half of 2019 to the first half of 2021, indicating that representative companies did not recover to pre-pandemic levels, and its operating profit margin was the lowest among the three countries.

South Korean representative companies outperformed those in the U.S. and Japan in the pharmaceutical bio and automotive sectors, while the petroleum refining sector showed relatively weak recovery in the first half of 2021.

In particular, South Korea’s pharmaceutical bio sector showed an outstanding growth rate in 2020 with a sales increase of 65.0%, far exceeding that of the U.S. (1.2%) and Japan (-2.0%). Its operating profit margin (31.8%) was also higher than those of the two countries (U.S. 19.0%, Japan 11.3%).

Ha Sangwoo, head of the Economic Research Department at the Korea Employers Federation, said, "The relatively good performance of our representative companies despite the COVID-19 shock last year is believed to be the result of not only effective quarantine measures but also companies continuously enhancing their competitiveness through relentless innovation."