South Korea’s major conglomerates saw their profitability deteriorate sharply this year
November 23, 2013 Leave a comment
Top 10 conglomerates suffer sharp margin erosion
2013.11.21 17:59:19
South Korea’s major conglomerates saw their profitability deteriorate sharply this year. Even the top-notch conglomerates, including the biggest Samsung Group and second-biggest Hyundai Motor Group, posted weaker operating margins. 83 listed subsidiaries except financial firms under the top 10 conglomerates by assets excluding public firms made 36.3 trillion won ($34.2 billion) in operating profit on an individual basis in the first three quarters this year, down 4.7 percent from 38.1 trillion won a year ago, according to corporate information provider Chaebul.com and electric notice system of Financial Supervisory Service Thursday. Their sales came to 526.8 trillion in the January-September period this year, up 1.9 percent from 517.0 trillion won in the same period of last year. But the fall in operating profit drove profitability sharply lower.
Their operating margin, a gauge of corporate profitability, lost 0.5 percentage points from 7.4 percent to 6.9 percent over the period.
Only SK Group and LG Group of the top 10 conglomerates improved operating margins year-on-year (yoy) between Q1 and Q3 this year. This suggests profitability of the other eight conglomerates including Samsung Group has worsened.
Hyundai Motor Group, POSCO Group, Hyundai Heavy Industries Group, GS Group, Hanjin Group and Hanwha Group suffered declining sales and operating profit simultaneously and both their external and internal stability have deteriorated.
Samsung Group’s 13 listed subsidiaries boosted sales 10.0 percent yoy in the year to Q3 and operating profit 2.2 percent.
But the 13 companies’ profitability has retreated as their operating margin slid 0.8 percentage points yoy to 10.8 percent this year. Samsung Electronics, a company with the country’s top market capitalization, maintains a good 13.8 percent operating margin, but this is still down from 14.5 percent of last year.
Sales of Hyundai Motor Group’s 10 listed subsidiaries dropped 2.2 percent yoy this year and their operating profit 9.6 percent.
Consequently, Hyundai Motor Group’s operating margin retreated 0.6 percentage points from 8.0 percent last year to 7.4 percent this year.
Sales of POSCO Group’s seven subsidiaries decreased 13.5 percent yoy this year and their operating profit 29.0 percent. Their operating margin plunged 1.1 percentage points yoy from 6.1 percent last year to 5.0 percent this year.
Sales of Hyundai Heavy Industries Group’s three subsidiaries dropped 5.3 percent yoy this year, and their operating profit plummeted 58.9 percent.
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