In the First Half of the Year, Despite Recession Concerns, KOSPI and KOSDAQ Listed Companies Show 'Strong' Earnings (Comprehensive)

[Asia Economy Reporter Minji Lee] Despite concerns about an economic recession, listed companies in the first half of the year showed increases in sales, operating profit, and net profit compared to the previous year. In the first half of the year, the KOSPI market saw notable performance in the automobile, transportation and warehousing, and transportation equipment sectors, while the KOSDAQ market recorded solid results from secondary battery and semiconductor parts companies.

According to the "2022 First Half Financial Results of December Fiscal Year-End Listed Companies on the KOSPI Market" announced by the Korea Exchange on the 18th, the consolidated operating profit of 603 December fiscal year-end listed companies (out of 696 companies, excluding 75 companies such as newly established companies, those with adverse audit opinions, and financial firms) was 107.3084 trillion KRW, a 16.68% increase compared to the same period last year.

Sales recorded 1,361.8708 trillion KRW, up 25%, and net profit was 85.807 trillion KRW, up 0.67%. Excluding Samsung Electronics (which accounts for 11.38% of sales), consolidated sales (up 25.77%) and operating profit (up 12.96%) increased, but net profit decreased by 7.42%. The overall operating profit margin was 7.88%, and the net profit margin was 6.3%, down 0.57 percentage points and 1.53 percentage points respectively from the previous year. This means that for every 10 million KRW in sales, 630,000 KRW remained as net profit.

Listed companies recorded better results in the second quarter compared to the first quarter, driving the improvement in first-half performance. Operating profit in the second quarter was 56.6898 trillion KRW, an 11.99% increase from the first quarter, while sales rose 6.65% to 702.8475 trillion KRW, and net profit increased 5.81% to 44.1138 trillion KRW during the same period.

By industry, all 17 sectors showed sales growth in the first half. In terms of operating profit, transportation and warehousing (178%), transportation equipment (85%), and petroleum and clothing (64%) showed the highest growth rates, while the electricity and gas sector turned to a loss, and the construction sector saw a 28% decrease in profit.

Among 43 financial companies, operating profit and quarterly net profit decreased by 8.58% and 7.47% year-on-year, recording 23.3784 trillion KRW and 18.6632 trillion KRW respectively. While financial holding companies (4.86%) and banks (0.67%) saw net profit increases, the securities (-43.44%) and insurance (-11.32%) sectors experienced significant declines in net profit, dragging down the overall financial sector performance.

KOSDAQ Listed Companies Show Strong Performance Thanks to Secondary Battery and Semiconductor Parts

KOSDAQ-listed companies also showed increases in sales, operating profit, and net profit.

According to the "2022 First Quarter Financial Results of December Fiscal Year-End Companies on the KOSDAQ Market" announced by the Korea Exchange on the same day, sales of 1,063 companies (excluding 127 companies that did not submit quarterly reports) based on consolidated financial statements reached 131.0865 trillion KRW, a 22.3% increase year-on-year. Operating profit and net profit rose 16.74% and 5.55% to 8.6896 trillion KRW and 6.9221 trillion KRW respectively. Operating profit margin fell by 0.22 percentage points year-on-year, but net profit margin rose by 0.18 percentage points to 5.37%.

The KOSDAQ Market Headquarters of the Korea Exchange explained, "Despite concerns about a global economic recession due to interest rate hikes, sharp increases in oil prices, and raw material costs, the IT parts (secondary battery) and semiconductor sectors drove earnings growth, improving operating profit margins."

In fact, 384 IT companies recorded year-on-year increases of 21.49%, 25.69%, and 3.12% in sales, operating profit, and net profit respectively. For IT hardware, which includes the semiconductor sector, sales, operating profit, and net profit all increased significantly by 24.15%, 55.13%, and 51.65%. Specifically, operating profit and net profit in IT parts rose by 198.56% and 168.76%, while the semiconductor sector increased by 23.29% and 18.71% respectively.

Among 483 manufacturing companies, sales and operating profit increased by 19.58% and 19.5% year-on-year, but net profit decreased by 2.36%. The metal sector showed the largest growth within manufacturing, with operating profit and net profit rising 59.14% and 109.91%. Conversely, the publishing and media reproduction sector turned to losses in both operating profit and net profit, and the food and tobacco sector's net profit declined by more than 62%.

Among 196 other sectors, sales, operating profit, and net profit increased by 28.96%, 0.45%, and 22.73% year-on-year respectively. The electricity, gas, and water supply sector turned to operating losses and continued to post net losses. In the construction sector, operating profit increased by 6.83%, but net profit fell by 24.73%.