[Top 100 Companies Report]⑦ Last Year, Large Corporations Earned 6.2 Won per 100 Won Sold... Margin Down 3 Percentage Points

Total Sales of Top 100 Listed Companies 2,043.3 Trillion KRW, Operating Profit 127 Trillion KRW
Operating Profit Margin 6.22%... Down 3 Percentage Points YoY
SK Biopharm Operating Profit Margin -52.3%

Samsung Electronics Ranked 1st in Sales, Operating Profit, and Net Profit Last Year
HMM Rises from 4th to 2nd in Operating Profit
Favorable Factors Including Rising Marine Freight Costs

Editor's NoteThe top 100 companies by market capitalization listed on the domestic stock market are like national representatives in sports. They represent each industry in Korea and lead the economy. The public's expectations are also high. Most investors buy stocks of these top 100 companies. Job seekers dream of working at these top 100 companies. Every year, around the time cherry blossoms bloom, the top 100 listed companies submit their business reports. The purpose is to self-assess how they performed as key players in Korea over the past year and whether they kept their promises. Asia Economy has examined the health of these companies based on the business reports submitted by the top 100 companies by market capitalization as of the end of Q1 this year. This is to check if they can continue to lead our economy this year, assess any injuries, and help them understand their strengths and weaknesses compared to other companies.

Last year, major domestic conglomerates earned a profit of 6.2 won for every 100 won worth of products and services sold. Although sales increased, profitability deteriorated due to adverse internal and external conditions such as rising raw material prices, labor costs, and interest rate hikes.

Asia Economy analyzed the '2022 business reports' of the top 100 listed companies (excluding financial firms) by market capitalization as of the end of Q1 this year. The total sales of the top 100 listed companies last year amounted to KRW 2,043.307 trillion, with operating profit of KRW 12.7865 trillion. Compared to the previous year, sales increased by 21.8%, but operating profit decreased by 18%. Sales increased in 86 companies, and operating profit increased in 63 companies. As the global economy, which had frozen due to COVID-19 fears in 2021, began to move again in 2022, major companies saw sales growth. However, operating profit declined due to soaring raw material prices caused by the Ukraine war and plummeting semiconductor prices.

The operating profit margin of the top 100 listed companies was 6.22%, down about 3 percentage points from 9.25% the previous year. Operating profit margin is a key profitability indicator representing the proportion of operating profit to sales. An operating profit margin of 10% means that for a product sold at 1,000 won, 100 won was earned as profit.

Among the top 100 listed companies, 89 had positive operating profit margins, while 11 recorded operating losses. The company with the lowest operating profit margin was SK Biopharm (-53.2%). This means that even when selling a product for 1,000 won, costs such as raw materials and labor exceeded revenue by 532 won. Last year, SK Biopharm recorded sales of KRW 246.2 billion and an operating loss of KRW 131.1 billion. Following were Korea Electric Power Corporation (-45.9%), HLB (-41.6%), and Samsung Heavy Industries (-14.4%) in order of lowest operating profit margin.

The company with the highest operating profit margin was HMM, Korea's largest shipping company, at 53.6%. It was the only company among the top 100 to exceed 50% operating profit margin. In 2021, it recorded 53.4%. The COVID-19 special led to a sharp rise in shipping freight rates, significantly improving performance. Following were DB HiTek (45.9%), Krafton (40.5%), and Samsung Biologics (32.8%) in order of high operating profit margin.

The highest net profit margin was recorded by Hanjin KAL at 329.2%. A high net profit margin means the company retains a large amount of cash relative to sales. Net profit is calculated by adjusting operating profit with non-operating income and expenses and deducting corporate tax. Even if a company incurs losses in its core business, net profit can increase if it earns significant income from non-operating activities such as real estate sales or financial asset management. In Hanjin KAL's case, last year, to vertically integrate low-cost carriers (LCC), it transferred Jin Air shares it held to Korean Air. This transaction generated a capital gain of KRW 493.6 billion, boosting the net profit margin. Following were HMM (54.3%), DB HiTek (33.4%), and LG (29.4%) in order of high net profit margin.

Among the top 100 listed companies last year, 83 had positive net profit margins, while 17 recorded net losses.

Samsung Electronics' Solo Run, HMM's COVID-19 Special

Last year, Samsung Electronics ranked first in sales, operating profit, and net profit. The positions of Samsung, Hyundai Motor, and Kia were solidified. A notable feature of last year's performance was shipping company HMM ranking second in operating profit and net profit due to the COVID-19 special.

Samsung Electronics dominated first place in sales, operating profit, and net profit last year. Its sales were twice, operating profit four times, and net profit five times higher than the second place. Sales reached a record high of KRW 302.2314 trillion. Operating profit was KRW 43.3766 trillion, and net profit was KRW 55.6641 trillion. The industry described Samsung Electronics' performance as a 'faded 300 trillion won in sales' because its Q4 operating profit of KRW 4.3061 trillion marked an 'earnings shock,' down 68.95% from the same period the previous year. The global economic downturn reduced demand for finished products such as IT devices and home appliances, negatively impacting semiconductor component performance.

Hyundai Motor ranked second in sales with KRW 142.5275 trillion, followed by SK (KRW 134.5516 trillion), Kia (KRW 86.559 trillion), and POSCO Holdings (KRW 84.7502 trillion). SK's sales increased by 38.4%, Hyundai Motor by 21.2%, and Kia by 23.9% compared to 2021. The global rise in electric vehicle demand and improvement in semiconductor supply shortages boosted Hyundai and Kia's sales.

In operating profit, HMM recorded KRW 9.9516 trillion, rising to second place after Samsung Electronics. It was fourth place the previous year. Hyundai Motor (KRW 9.8198 trillion), SK (KRW 8.0047 trillion), and Kia (KRW 7.2331 trillion) followed. HMM's 'earnings surprise' was due to rising freight rates caused by the ongoing COVID-19 pandemic and port congestion in the U.S. until the first half of last year. Except for Samsung Electronics, most companies in the top five operating profit rankings posted double-digit growth compared to 2021. SK (64.7%), Hyundai Motor (47%), Kia (42.8%), and HMM (34.9%) ranked in that order.

In net profit, HMM recorded KRW 10.0854 trillion, ranking second, up five places from seventh last year. Hyundai Motor (KRW 7.9836 trillion), Kia (KRW 5.409 trillion), and SK (KRW 3.9662 trillion) ranked third to fifth. Net profit growth rates were 89% for HMM, 40.2% for Hyundai Motor, 39.5% for Samsung Electronics, and 19.6% for Kia. SK's net profit decreased by 30.5%.