Major Companies Post Stellar Earnings

Major Korean businesses like Hyundai, Kia, POSCO and Naver announced stellar second-quarter earnings on Thursday.

Pent-up buying demand and a shortage of raw materials created a suppliers’ market, and businesses that invested steadily in new products fared well. But there was an increasing gap between the earnings of top exporters and lower-ranking rivals.

Hyundai’s quarterly sales surpassed W30 trillion for the first time in the second quarter (US$1=W1,150). Operating profit soared 220 percent to W1.89 trillion, the highest in seven years. Operating margin increased 3.5 percentage points to 6.2 percent after Hyundai shifted its sedan-focused lineup to more popular SUVs and the luxury Genesis brand.

Rising sales of more expensive cars boosted both revenues and profits, and a supply shortage of computer chips ended up benefiting the bottom line, according to analysts.

Koh Tae-bong at Hi Investment and Securities, said, “There was a shortage of cars while pent-up demand increased, and the resulting scarcity meant Hyundai was able to sell new models at full price and cut inventory costs.”

Kia also achieved its highest second-quarter sales of W18.34 trillion and operating profit at W1.49 trillion. Its plant in India, which was completed in late 2019, started full-fledged production, while brand innovation efforts also paid off handsomely, resulting in operating profit to match big brother Hyundai’s.

Hyundai and Kia’s market share in the U.S., Europe and Southeast Asia has also increased.

POSCO’s second-quarter sales of W18.29 trillion and operating profit of W2.2 trillion were both records. Operating profit surged a staggering 1,194.1 percent on-year thanks to an industry boom. “The global economy regained vitality due to the rollout of coronavirus vaccines, resulting in a surge in demand for steel, while raw material prices increased sharply so that both selling prices and volume grew,” the steelmaker said.

LG Household and Healthcare’s sales also rose to a record W4.06 trillion in the first half of this year, while operating profit reached W706.3 billion. Sales rose 10.3 percent on-year and operating profit 10.9 percent. High-priced cosmetics brands such as Whoo and Su:m led sales during the first half. A recovery in China’s economy was the main driver.

Naver also achieved the record sales of W1.66 trillion and operating profit of W33.56 million in the second quarter, up 30.4 percent and 8.9 percent, thanks to its expansion into new businesses like online commerce, cloud servers and financial services.

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