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S. Korea’s top 10 conglomerates post mixed results in Q1

2016.05.16 16:49:46 | 2016.05.19 16:08:20
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South Korea’s 10 largest conglomerates in terms of market capitalization reported mixed results for the first quarter. While the firms that largely rely on domestic spending including AmorePacific Group and CJ Group posted improved earnings from last year, leading exporters such as LG Group and SK Group earned less than expected amid falling display and semiconductor prices.

According to Seoul-based market data provider FnGuide’s data compiled by the Maeil Business Newspaper on Sunday, 51 of total 82 affiliates of the nation’s top 10 conglomerates that are listed in the country’s benchmark Kospi market have announced their earnings for the first three months of this year by May 13. And AmorePacific Group and CJ Group were the cream of the crop, according to compiled data.

The nation’s leading cosmetics group raked in 756.8 billion won ($641.7 million) in combined operating profit during the first quarter ended in March, up 26.4 percent from 598.6 billion won a year ago. Total market capitalization of its unit AmorePacific Corp. and AmorePacific Group (Amore G), the group’s holding company, amounted to 38.4 trillion won as of last Friday, making the group the fifth biggest by market capitalization. In particular, Amore G’s operating profit soared 30.7 percent to 419.1 billion won from 320.6 billion won a year earlier, backed by steady growth in sales of its budget cosmetic brands, Innisfree and Etude, as well as stellar performance of AmorePacific raking in 337.7 billion won, up 21.5 percent on year. Lee Dal-mi, an analyst at Hyundai Securities Co., painted a rosy outlook for the company for the next quarter, with expectations that the company will likely see its sales from duty free stores further jump from the first quarter and sales of its budget cosmetic brands Innisfree and Etude grow 30 percent and 10 percent on quarter, respectively.

CJ Group units also reported the first-quarter earnings that beat market expectations. According to the Korea Exchange (KRX), combined market capitalization of the group’s eight business arms (excluding preferred stock) tallied at 25 trillion won, up 6 percent from 1.38 trillion won marked at the end of last year.

CJ E&M Corp. posted an operating profit of 8.9 billion won for the first quarter, down 3 percent on year, and sales of 313.6 billion won, up 7 percent, but the results came above expectations, according to market experts. CJ Cheiljedang Corp. also beat market expectations after reporting an operating profit of 232.8 billion won on sales of 3.5 trillion won.

KT&G Corp., the country’s tobacco maker, reported that its operating profit for the first quarter fell 8.3 percent on year to 393 billion won. But the result was 42 percent higher than the market consensus of 281.5 billion won. In terms of market capitalization, the group ranked 10th, outcompeting major players in terms of assets - GS Corp., Hyundai Heavy Industries Co. (HHI), Hanjin and Hanwha Group.

The nation’s largest conglomerate Samsung Group, however, saw a combined operating profit of its 12 units for the first quarter drop 7.3 percent on-year to 5.97 trillion won, despite its fresh start with decent earnings from Samsung Electronics Co. Such a fall is partly attributed to the divestiture of its defense and chemical units to Hanwha and Lotte Group, but disappointing performance of its listed units, except Samsung Electronics, is largely to blame.

Samsung SDI Co. swung to loss after its chemical division was spun off to be merged into Lotte Group early this year while Samsung C&T Corp. recorded 434.8 billion won in operating loss, five times higher than a loss of 89.1 billion won in the previous quarter. Samsung Heavy Industries Co. (SHI) saw its first-quarter operating profit slide 76.8 percent on year, Hotel Shilla 42.6 percent and Samsung Electro-Mechanics Co. 29.4 percent.

On the auto front, Hyundai Motor Group, the nation’s largest auto group’s combined operating profit for the first quarter slid 3.9 percent year over year to 3.5 trillion won. Hyundai Motor Co.’s operating profit dropped 15.5 percent to 1.3 trillion won on year, while Hyundai Wia Corp. and Hyundai Steel Co. also saw their operating profit fall 38.5 percent and 20.8 percent, respectively.

LG Group, with nine affiliates’ earnings disclosed, raked in 1.5 trillion won in total operating profit, down 19 percent on year. LG Electronics Inc.’s 65.5 percent on-year gain in operating profit was largely offset by LG Display Co.’s and LG Innotek Co.’s operating loss of 94.7 percent and 99.4 percent, respectively.

Units of SK Group reported mixed results. SK Innovation Co.’s first-quarter operating profit skyrocketed 163 percent to 844.8 billion won from 321.2 billion won a year ago, whereas SK Hynix Inc.’s earnings were shaved 64.6 percent from 1.6 trillion won to 561.8 billion won. The group as a whole saw its operating profit down 10.2 percent.

Lotte Group only disclosed earnings for two of its eight Kospi-listed arms.

By Noh Hyun, Bae Mi-jung, and Kim Tae-joon

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]

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