Approximately one in three listed firms in South Korea reported third-quarter earnings below expectations, primarily due to poor performance in the semiconductor and battery sectors. Major companies such as Samsung Electronics and Hyundai Motor were among those affected. This underperformance has led to overall economic growth being significantly lower than projections, prompting potential revisions in growth forecasts by the government and Bank of Korea.
A recent report reveals that one in three publicly traded companies in South Korea failed to meet market expectations regarding their third-quarter earnings. This shortfall is primarily attributed to underperformance in the semiconductor and rechargeable battery sectors. According to FnGuide, as of Thursday, 165 listed firms had reported their quarterly results, with approximately 61.82 percent reporting operating losses that exceeded projections or were worse than the previous year. Prominent companies, including Samsung Electronics, Hyundai Motor, and LG Chem, were among those that fell short. Additionally, 57 companies experienced significant earnings surprises, indicating their quarterly profits were at least 10 percent lower than expectations. Collectively, these firms reported operating profits totaling 50.14 trillion won ($35.83 billion), which reflects a 5.8 percent decline relative to forecasts. The disappointing corporate earnings have contributed to a slowdown in South Korea’s economic growth. Data from the Bank of Korea indicates that the nation’s gross domestic product increased by only 0.1 percent during the July-September period, markedly below the anticipated 0.5 percent. Analysts predict that both the government and the Bank of Korea are likely to revise their growth forecasts downward for the remainder of the year. Kim Jin-sung from Heungkuk Securities commented, “Growth in the overall production, consumption and investment aspects has slowed down along with the limited global demand for semiconductors and other key items.”
This report highlights the challenges faced by South Korean firms in the third quarter of the fiscal year, particularly in crucial sectors such as technology and automotive. The reliance on global demand for products like semiconductors and batteries has made these industries particularly susceptible to fluctuations in performance. The overall financial health of these publicly listed companies is integral to understanding the broader economic conditions in South Korea, as they are major contributors to national GDP and employment.
In summary, the inability of a significant portion of South Korean firms to meet earnings expectations underscores the economic challenges posed by sector-specific downturns and global demand issues. The widening gap between expected and actual earnings, coupled with a slow economic growth rate, may necessitate revisions to growth forecasts by authorities, highlighting a concerning trend in the country’s economic landscape.
Original Source: www.koreatimes.co.kr
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