Combined operating profit of companies publicly trading on the main Kospi bourse is projected to have shriveled nearly 17 percent on year in the first three months and will likely worsen in the coming following quarter to better reflect the fallout from global coronavirus pandemic.

According to Seoul-based financial data provider FnGuide on Sunday, combined first-quarter operating profit of 141 Kospi-listed firms was estimated at 16.79 trillion won ($13.63 billion), down 16.92 percent from a year earlier.

It would be the second consecutive year for Korean companies to report year-on-year plunge in double digits in their earnings for the first quarter. The combined operating profit of total 573 Kospi members sank 36.88 percent on year in the first quarter of 2019.

Before the outbreak of the virus, estimated profit for the first quarter was expected to grow 9.2 percent to 22.84 trillion won.

Of the 141, 72 were projected to see earnings deteriorate.

Samsung Electronics is expected to have added 0.08 percent gain in operating profit, Hyundai Motor 4.14 percent, and Samsung C&T 67.99 percent, with KEPCO estimated to have earned 421.7 billion won after reversing from losses.

Profit by SK Hynix is projected to have plunged 66.7 percent, LG Electronics 5.35 percent, Posco 43.77 percent, Hyundai Mobis 2.29 percent and Kia Motors 30.78 percent. SK Innovation is expected to report an operating loss of 472.9 billion won.

The consensus on Samsung Electronics is 6.24 trillion won and if it turns out lower figure, the sentiment in the market could further be dampened.

“First-quarter statements are important to assess virus impact on the country’s financial fundamentals,” said Kim Yong-ku, an analyst at Hana Financial Investment.

Securities firms however have revised down their earnings outlook for Samsung Electronics recently. Hanwha Investment & Securities on Friday slashed its estimation for the company’s operating profit in the first quarter to 5.77 trillion won from 6.43 trillion won, with stock price target down to 60,000 won from 70,000 won.

“Demand for smartphones and TVs started falling amidst ongoing virus risk. Samsung Electronics is expected to report weak numbers for the first quarter and further deterioration also in the following quarter,” warned Lee Soon-hak, an analyst at Hanwha Investment & Securities.

“The IT & Mobile Communications (IM) division is most vulnerable from the virus impact. Considering slow sales of its premium smartphones, the company’s first-quarter operating profit is estimated to have totaled 5.7 trillion won,” said Kim Kyung-min, an analyst at Hana Financial Investment.

Kim Dong-wan, an analyst at KB Securities, also forecast its operating profit to have reached 5.8 trillion won, citing the reduced shipments of mobile phones and home appliances during the period.

Samsung Electronics shares on Monday rose 3.62 percent to close at 48,700 won in Seoul.

By Pulse

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