CXO Research Institute, Survey on Operating Profit Status of Listed Companies from 1996 to 2022
Samsung Electronics Ranks Low in Q3... First Defense Crisis in 15 Years Since 2009
Samsung Electronics is on the verge of losing its position as the top domestic listed company in operating profit for the first time in 15 years. Its operating loss for the third quarter (July to September) alone, based on separate financial statements, approached 10 trillion won. It must generate over 1.6 trillion won in operating profit in the fourth quarter (October to December) to maintain its top spot. Kia and Hyundai Motor are in fierce pursuit.
The Korea CXO Institute, a corporate analysis specialist, announced the results of its survey on the "Changes in the Top Domestic Listed Company in Operating Profit from 1996 to 2022" on the 16th. The survey was based on separate financial statements.
Samsung Electronics announced preliminary results for the third quarter on a consolidated basis, with sales of 67 trillion won and an operating profit of 2.4 trillion won, exceeding expectations by more than 2 trillion won. The photo was taken on the 11th of last month at Samsung Electronics Seocho Building in Seoul. Photo by Kang Jin-hyung aymsdream@
Samsung Electronics held the top position every year except in 1996 (Korea Electric Power Corporation) and 2008 (POSCO Holdings). It maintained the top spot for 11 consecutive years from 1997 to 2007 and for 14 consecutive years from 2009 to 2022. In 2012, it opened the era of operating profits exceeding 10 trillion won with 12.0168 trillion won. The following year, it entered the 20 trillion won era with 21.807 trillion won, the 30 trillion won era in 2017 with 34.857 trillion won, and pioneered the 40 trillion won era in 2018 with 43.6994 trillion won.
Samsung Electronics also posted operating profits in the 20 to 30 trillion won range in 2020 (20.5189 trillion won), 2021 (31.9931 trillion won), and last year (25.3193 trillion won). However, since recording an operating loss of about 420 billion won in the fourth quarter of last year, the deficit has been increasing. It posted operating losses of 3.9087 trillion won in the first quarter (January to March), 3.6981 trillion won in the second quarter (April to June), and 2.1679 trillion won in the third quarter. The cumulative operating loss for this year is 9.7748 trillion won.
The CXO Institute explained, "This year's performance is a poor and low score that Samsung Electronics has never experienced since 1996," adding, "Operating profit and loss have plummeted vertically to the bottom tier among domestic listed companies up to the third quarter."
The CXO Institute assessed that the possibility of Samsung Electronics maintaining its separate operating profit top spot is slim. From 2009 to 2022, Samsung Electronics' average operating profit in the fourth quarter was about 4.6 trillion won. It surpassed 10 trillion won in operating profit in the fourth quarter only once, in 2017 (11.2594 trillion won). The CXO Institute estimated that Samsung Electronics would need to generate at least 16 trillion won in the fourth quarter to secure first place this year.
Rather than defending its top spot in operating profit, attention is focused on whether Samsung Electronics can return to profitability, the CXO Institute reported. To turn a profit in the fourth quarter, it must earn more than 9.7748 trillion won. The CXO Institute said, "The gap between Kia, which is first in operating profit based on separate financial statements up to the third quarter, and Samsung Electronics is 14.7394 trillion won, and Kia is expected to earn about 1 to 2 trillion won in operating profit in the fourth quarter," adding, "It is realistically difficult for Samsung Electronics to maintain first place."
The CXO Institute also judged that it is difficult for Samsung Electronics to maintain the top spot in consolidated operating profit. Hyundai Motor is likely to take first place on a consolidated basis. Hyundai Motor recorded a consolidated operating profit of 11.6524 trillion won in the third quarter, while Samsung Electronics earned 3.7422 trillion won. Hyundai Motor's profit was more than three times that of Samsung Electronics.
Oh Il-sun, head of the CXO Institute, said, "Even if Samsung Electronics cannot avoid short-term management difficulties this year due to the business environment, it is important to actively foster new products and new businesses in the mid to long term to overcome the crisis," adding, "Next year, the company must completely renew its organizational atmosphere and strengthen its crisis response capabilities."
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