Manufacturing conglomerate to show ‘plus’ result in 1Q overcoming ‘owner risk’
Park Jung Il | comja77@ | 2018-04-23 10:56:08

Despite the recent controversy over various owner-occupied risks, large-cap manufacturing companies` 1Q operating profit rose by more than 20% compared to the same period last year. However, earnings of electronic and IT (information technology) businesses such as semiconductors improved greatly, while those of automobile industry declined. It seems that the trend toward electronics and IT manufacturing has become worse than last year.

According to the financial information analyst Wise F.N. on April 22, 23 out of the top 50 market cap of Samsung Electronics, SK Hynix, and Hyundai Motor Company, the average of 1Q09 results is estimated, resulting in sales of 203,324.2 billion won, It was 28,868.9 billion won.

That is up 6.7 % and 26.7 % from the same period last year.

Thanks to brisk earnings at electronics and IT manufacturers, Samsung Electronics and SK Hynix. Samsung Electronics already posted sales of KRW 60 trillion and operating profit of KRW 15.6 trillion in the first quarter of this year. SK Hynix is also expected to earn more than KRW 4.4 trillion in operating profits, up from last year`s (KRW 2.46 trillion). Both companies have driven up memory semiconductor prices.

LG Electronics also announced its provisional announcement earlier this month that it broke the market expectation and earned an operating profit of KRW 1.107 trillion, the second in its history. Most of the IT and electronics industries succeeded in improving earnings, except that LG Display was predicted to switch to a deficit in 1Q due to declining LCD panel prices.

The refining, chemical and steel materials industries remained flat YoY. Sales of six large companies such as POSCO, LG Chemical, SK Innovation, Lotte Chemical, S-Oil and Hyundai Steel rose 7.5% YoY and operating profit fell 5.2% YoY. Profitability decreased slightly due to rising oil prices, but sales increased. Although the steel industry has been growing anxious due to recent trade tensions between the United States and China, overall demand is expected to improve further in 1Q09 due to the global economic recovery.

Meanwhile, the car is still stuck.

Hyundai & Kia Motors, Hyundai Mobis, and Hankook Tire`s 1Q operating profit forecasts totaled 1.9756 trillion won, down 22.1% from the same period last year. We are seeking breakthroughs by exploiting emerging markets and pursuing future markets, such as electric and autonomous vehicles, but they seem to be pushed out of the market competition.

There is a growing interest in the electronics and IT industries in the manufacturing sector. Among the top 23 manufacturing companies, Samsung Electronics and SK Hynix accounted for 74.7% of the total operating profit of the seven electronics and IT companies. During the same period last year, these companies accounted for 63.6% of operating profit. In the business world, there is a voice to worry about the growth engine since next year when the semiconductor boom is slowing down.

In addition to the existing mainstay industries such as automobiles, oil refining, chemicals, shipbuilding and steel, and China, we are seeing new growth engines in the IT sector, including semiconductors and displays.

Although the biotechnology industry is attracting attention, there are still differences between the US and Europe. "It is a colder winter to come to the analogy," said a business official. "The preparations for wintering are the same as last year," he said. "In the meantime, we are facing external risks, such as pressure on political circles and public criticism."

By Park Jung Il comja77@

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