Over six out of 10 companies listed on the country’s main bourse are expected to face earnings shock in the fourth quarter due to weak domestic demand caused by the prolonged slump
December 25, 2013 Leave a comment
2013-12-24 16:12
Six in 10 firms hit by earnings shock
By Yi Whan-woo
Over six out of 10 companies listed on the country’s main bourse are expected to face earnings shock in the fourth quarter due to weak domestic demand caused by the prolonged slump, data showed Wednesday.According to a report released by FnGuide, a financial information provider, Tuesday, 62.5 percent of 176 major companies listed on the Korea Composite Stock Price Index (KOSPI) are forecast to see their profits further deteriorate between October and December.
It has lowered the combined operating profit for the 176 companies to 31.93 trillion won ($30.09 billion) in its December report, down 1.3 percent from the previous month. The outlook is based on forecasts reports by securities companies.
“Weak domestic demand seems to have dealt a blow to large companies,” said Lee Jong-woo, managing director at I’M Investment & Securities. “And it is hard to predict when their business performance will get better despite the U.S. and other advanced economies will recover next year and could influence the KOSPI-listed companies positively.”
Global tech giant Samsung Electronics is likely to post an operating profit of 10.34 trillion won in the fourth quarter, according to FnGuide. The figure is down from 10.5 trillion won in its November outlook, it said.
The nation’s leading mobile carrier KT is also expected to see its operating profit fall by 11.8 percent to 216.2 billion won during the same time period.
The report also lowered the forecast for Kia Motors by 2.1 percent and LG Electronics by 3.4 percent. Each of the companies is a flagship affiliate of the country’s No. 2 conglomerate Hyundai Motor Group and third-ranked LG Group, respectively.
The country’s leading steelmaker POSCO and Korean Air, the nation’s largest flagship carrier, are forecast to see an additional decrease of 1.6 percent and 14.8 percent in their operating profit, respectively, compared to forecasts made in November, FnGuide said.
It predicted Nepes, an IT parts manufacturer, will suffer the highest fall in its operating profit outlook among the 176 companies as it lowered the figure by 64.4 percent to 3 billion won.
By industry, energy, telecommunications, and IT sectors are likely to be hit hard by earnings shock.
The energy sector is expected to see the biggest drop of 2.8 percent in operating profit during the fourth quarter, followed by 2.5 per
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