Large Corporations' Operating Profit Plummets 69% in Q4 Last Year... Impact of the 'Semiconductor Winter'

CEO Score Top 500 Companies Performance Survey
Hyundai Motor and Kia Show Strong Growth with 1 Trillion KRW Increase in Operating Profit

Last year, the operating profit of major domestic conglomerates in the fourth quarter plummeted by about 70%. This was due to a sharp decline in the performance of Samsung Electronics and SK Hynix, which are leading exporters in the semiconductor sector. Meanwhile, operating profits in the automobile and parts industries, including Hyundai Motor and Kia, increased thanks to the popularity of eco-friendly vehicles and sports utility vehicles (SUVs).

On the 22nd, CEO Score, a corporate data research institute, surveyed the fourth-quarter performance of 262 companies out of the top 500 domestic companies by sales whose results were available. The total sales amounted to KRW 662.4211 trillion, an increase of 11.3% compared to the previous year. Operating profit was KRW 12.9871 trillion, a sharp drop of 69.1%.

Until the second quarter of last year, the combined operating profit reached KRW 50 trillion, but as the global economy began to slump in the second half, operating profit in the third quarter started to decrease by 34.2% year-on-year. The decline in the fourth quarter was even greater.

The Samsung Seocho Building in Seocho-gu, Seoul, as announced on January 31, when Samsung Electronics reported consolidated sales of 70.4646 trillion KRW and operating profit of 4.3061 trillion KRW for the fourth quarter of last year.
[Photo by Hyunmin Kim kimhyun81@]

Among the 19 industries surveyed, 13 saw a decrease in operating profit. The decline in performance was particularly notable in the IT, battery, and electronics sectors, including semiconductors. Operating profit in this sector for the fourth quarter of last year was KRW 3.0368 trillion, a steep drop of 85.4% compared to the same period the previous year. CEO Score explained, "This is due to sluggish sales of Korea’s representative export items such as semiconductors, home appliances, and mobile phones amid the global economic slowdown."

Public enterprises saw their operating losses more than double from KRW 4.3422 trillion to KRW 9.7806 trillion during the same period. Despite sales increasing by KRW 13.1836 trillion over the year, they remained in the red. CEO Score stated, "Although profits of power generation public enterprises increased due to soaring energy raw material prices, the hike in public utility fees such as electricity and gas tariffs faced setbacks, causing deficits at companies like Korea Electric Power Corporation (KEPCO) to balloon."

Operating profits in steel, petrochemicals, and transportation also decreased by more than KRW 1 trillion.

Operating profits in the automobile and parts sectors surged. The operating profit for the automobile and parts sector in the fourth quarter of last year was KRW 7.5169 trillion, an increase of 119.3% compared to the same period the previous year. During the same period, the shipbuilding, machinery, and equipment sectors turned profitable, thanks to a boom in orders. The food and beverage and energy sectors also saw operating profits increase by more than KRW 100 billion.

By company, Samsung Electronics experienced the largest decline in operating profit. Samsung Electronics’ operating profit in the fourth quarter of last year was KRW 4.3061 trillion, down 68.9% year-on-year. SK Hynix recorded an operating loss of KRW 1.8984 trillion in the fourth quarter of last year, turning to a deficit. CEO Score commented, "This is due to a sharp drop in semiconductor demand," adding, "With semiconductor prices continuing to fall globally, the operating loss is expected to widen further in the first half of this year."

KEPCO, POSCO Holdings, HMM, LG Display, Hyundai Steel, and others also saw operating profits decrease by more than KRW 1 trillion.

Hyundai Motor recorded an operating profit of KRW 3.3592 trillion in the fourth quarter of last year, showing a remarkable increase of 119.6% compared to the previous year. Kia also increased its operating profit by 123.3% year-on-year to KRW 2.6243 trillion in the fourth quarter of last year. Hyundai Motor and Kia were the only two companies whose operating profit increase exceeded KRW 1 trillion in the fourth quarter compared to the previous year.

Korea Gas Corporation, Hyundai Heavy Industries, Samsung Life Insurance, Samsung C&T, and Samsung SDI also increased their operating profits by more than KRW 100 billion.

The net profit of the 262 surveyed companies decreased by 20.8%, from KRW 29.0748 trillion in the fourth quarter of 2021 to KRW 23.0136 trillion in the fourth quarter of last year.