Companies listed on the Korea Composite Stock Price Index posted record sales, operating profits and net profits last year. Their combined net profits surpassed W100 trillion for the first time ever (US$1=W1,057). But the surge was dominated by semiconductor titans Samsung and SK Hynix, while others fared less well.
Analysis of the consolidated financial statements of 533 KOSPI-listed companies released by the Korea Stock Exchange and Korea Listed Companies Association on Tuesday showed that 2017 revenues amounted to W1,823 trillion, up 9.96 percent from the previous year.
Combined operating profits and net profits reached W158 trillion and W115 trillion, up 28.17 and 40.12 percent. All soared to record levels since international accounting standards were implemented in 2011.
The booming semiconductor market and soaring exports were the main reasons behind the stellar earnings. Samsung Electronics posted a massive operating profit of W53 trillion and SK Hynix W13 trillion due to strong exports of DRAM and NAND flash chips. Their combined operating profits accounted for a whopping 43 percent of the combined operating profits of all KOSPI-listed firms.
If Samsung Electronics is excluded, operating profits and net profits of KOSPI-listed companies increased only 10.94 and 22.61 percent to W104.97 trillion and W72.41 trillion. If SK Hynix is excluded as well, operating profits actually dropped 0.2 percent on-year to W90 trillion.
The operating margin of all the companies was nine percent but that fell to 5.82 percent excluding Samsung and SK Hynix, down 0.47 percentage point compared to 2016.
The polarization becomes even more distinctive in individual sectors.
In the electronics industry, which includes Samsung and SK Hynix, operating profits rose 211.65 percent and net profits 178.93 percent. But the transport equipment industry including automakers saw operating profits plummet 54.07 percent, and net profits of the electric and gas industry also fell 55.38 percent.
An Young-jin at SK Securities said, "When you exclude the IT sector, which benefited from booming markets, and the petrochemical industry, which benefited from rising oil prices, very few sectors actually made money."
An endemic problem of the Korean economy is a high reliance on certain sectors for earnings, and analysts forecast the trend will continue this year.
◆ Kosdaq Gains and Losses
Companies listed on the tech-heavy junior Kosdaq market also benefited from booming markets. The 861 Kosdaq-listed companies achieved consolidated combined sales of W170.1 trillion, operating profits of W9.8 trillion and W4.9 trillion in net profits. But their operating margin grew just 0.11 percentage point, while their net profit margin declined 0.18 percentage points.
The difference in earnings was again distinct between IT and non-IT sectors. The 423 Kosdaq-listed IT companies saw revenues rise 9.81 percent and operating profits and net profits soar 41.44 percent and 42.33 percent.
But the 682 non-IT companies saw combined net profits drop 13.16 percent even though revenues and operating profits rose 8.47 percent and 5.81 percent. That means the amount of money they actually earned declined.