The combined operating profit of South Korea’s listed enterprises reached nearly $40 billion in the second quarter, the highest-ever quarterly result mainly buoyed by the nation’s tech giant Samsung Electronics Co.’s stellar performance. The oil refining, chemical, and construction sectors benefited by a strong Korean currency against U.S. dollar and restructuring endeavors.

Sustainability beyond the second quarter remains questionable as growth in sales remained stagnant.

According to the Korea Exchange and Seoul-based market data provider FnGuide on Wednesday, the combined operating profit of 1,420 companies listed on the main Korea Composite Stock Price Index (Kospi) and secondary Korea Securities Dealers Automated Quotations (Kosdaq) bourses recorded 43.1 trillion won ($39 billion) in the second quarter ended June this year. It is the first time ever for the quarterly operating profit to surpass 40 trillion won.

The Kospi-listed companies registered a total operating income of 41 trillion won in the quarter, while Kosdaq-listed firms recorded 2 trillion won in total. Their overall operating profit for the April-June period is an 8.5 percent jump from 39.8 trillion won in the previous quarter and a 27.6 percent surge from 33.8 trillion won a year ago. The average operating margin for both Kospi and Kosdaq reached record highs of 9.7 percent and 5.7 percent, respectively.

The manufacturing industries such as industrial materials makers displayed strong growth. Samsung Electronics last month reported that its consolidated operating profit for the second quarter came to 8.14 trillion won, the highest quarterly operating profit in nine quarters. Each of SK Innovation Co., Lotte Chemical Corp., and LG Chem Ltd. also reported an about 10 percent on-year gains in operating income in the quarter. The stronger Korean won against the U.S. dollar partly helped boost operating profit of refining and chemical companies that imports raw materials to manufacture their products.

Hyundai Heavy Industries Co. that posted 170 billion won operating loss in the second quarter last year even made a turnaround, recording an operating profit of over 500 billion won. The companies’ rigorous efforts to restructure and enhance their financial health during the past three years have paid off, said Lee Jong-woo, head of research center at IBK Investment Securities.

But most of the country’s shipping and shipbuilding companies including Samsung Heavy Industries Co., Hyundai Merchant Marine Co., Hanjin Shipping Co., and STX Offshore & Shipbuilding Co. continued to log losses due to a prolonged slump in the global shipbuilding and shipping industries. Another market bellwether Hyundai Motor Co., the country’s top automaker, also posted a mere 0.6 percent gain in its operating income over the cited period as slow sales in overseas markets offset the hike in demand at home led by the country’s special consumption tax benefits for car purchases.

The June-quarter operating profit of the secondary Kosdaq-listed firms expanded 11 percent on year and 13.9 percent on quarter. Electronics and telecommunications companies performed poorly, those in the rest of the sectors all reported stellar results.

Market watchers, however, remained cautious about whether the latest operating income growth would continue after their sales only inched up or retreated. Based on the preliminary sales data of 633 Kospi-listed firms excluding the result of financial companies, the combined sales for the second quarter increased 2.7 percent to 407.6 trillion won from the previous quarter. Their sales for the first six months of this year improved a mere 0.6 percent from a year earlier.

By Choi Jae-won and Lee Yong-gun

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