KOSPI and KOSDAQ Listed Companies' Operating Profit Halved in Q1 This Year

Impact of US-China Semiconductor Conflict Reflected in Earnings
Electrical and Electronics Sector Turns to Loss
Securities and Insurance Sectors See Earnings Increase Due to Base Effect

In the first quarter of this year, the operating profit of companies listed on the Korea Composite Stock Price Index (KOSPI) market on a consolidated basis decreased by 52.7% compared to the previous year. Sales increased by 5.6% year-on-year, but net profit fell by 57.6%. In particular, the electrical and electronics sector turned to a loss, while securities companies, which had poor performance due to last year's weak index, saw an increase in operating profit due to the base effect.

According to the "KOSPI Market December Fiscal Year 2023 First Quarter Earnings Results" announced by the Korea Exchange on the 17th, the consolidated operating profit of 622 companies plunged 52.7% year-on-year to KRW 25.1657 trillion. Consolidated sales amounted to KRW 697.3744 trillion, up 5.69%. Net profit was KRW 18.8424 trillion, down 57.6% from the previous year.

Excluding Samsung Electronics, the largest company by market capitalization in Korea, the decline in operating profit of listed companies narrowed to the 30% range. This confirms the impact of the US-China semiconductor conflict on earnings. Samsung Electronics' share of total KOSPI-listed companies' sales dropped to 9.14% in the first quarter of this year due to an earnings shock, down about 2.63 percentage points from 11.77% in the first quarter of last year.

Excluding Samsung Electronics, the total operating profit of KOSPI-listed companies fell 37.4% to KRW 24.5255 trillion. Total net profit also plunged 47.9% year-on-year to KRW 17.2678 trillion. Total sales increased by 8.8% to KRW 633.629 trillion.

Excluding Korea Electric Power Corporation, which recorded a loss exceeding KRW 30 trillion last year, the operating profit of all KOSPI-listed companies decreased by 48.6% to KRW 31.3433 trillion. Total net profit plunged 52.9% to KRW 23.7537 trillion, while total sales increased by 5.1% to KRW 675.7803 trillion.

By industry, financial companies such as securities and insurance firms showed a notable increase in operating profit. The combined operating profit of 42 financial companies was KRW 15.3103 trillion, up 9.5% year-on-year. Securities companies' operating profit rose 28.1% to KRW 1.5886 trillion, and insurance companies' operating profit increased 16.3% to KRW 4.0027 trillion.

As the net profit growth rate of KOSPI-listed companies turned negative in the first quarter, the proportion of profitable companies decreased. Among the 622 companies analyzed based on consolidated financial statements, 470 companies (75.56%) posted net profits in the first quarter of this year, down 19 companies (3.1 percentage points) from 489 companies in the same period last year.

Meanwhile, the operating profit and net profit of KOSDAQ-listed companies on a consolidated basis also declined compared to last year in the first quarter of this year.

The operating profit of KOSDAQ-listed companies in the first quarter was KRW 1.9746 trillion, down 45.0% year-on-year. Net profit also decreased by 20.8% to KRW 2.7265 trillion. However, sales increased by 2.7% to KRW 45.205 trillion.

By industry, operating profit decreased across the board. Sales and operating profit of the transportation equipment and parts manufacturing industry (including automobiles) increased by 23.4% and 149.8%, respectively, compared to the previous year. On the other hand, sales and operating profit of the IT hardware sector, centered on semiconductor and IT parts manufacturing, decreased by 16.0% and 76.1%, respectively. The decline in IT performance is interpreted as having affected KOSDAQ-listed companies as well.

Among the 1,402 KOSDAQ-listed companies, 58.1% (814 companies) recorded profits, while 41.9% (588 companies) posted losses.