As domestic corporations near the end of their fourth-quarter earnings announcements for last year, more than six out of 10 listed companies came in below market expectations. Semiconductor bellwethers helped hold the line, but many others could not overcome one-off expense and weakening demand.
According to FnGuide on the 15th, among 246 listed companies with estimates from at least three brokerages, 158 (64% of the total) posted operating profit below the consensus (the brokerage average). In contrast, only 88 corporations (36%) met or beat market expectations.
Krafton showed the largest gap between actual operating profit and consensus. Its fourth-quarter operating profit last year was 2.4 billion won, 98% below the 123.2 billion won consensus. One-off expense related to labor costs and lawsuits weighed on results, compounded by lower mobile game revenue during the seasonal off-peak.
Kumho Petrochemical also recorded 1.5 billion won in operating profit, 97% below the 48.3 billion won consensus. Weaker profitability in the synthetic rubber institutional sector due to year-end demand slowdown and falling materials and supplies prices is cited as the main cause. In addition, ▲POSCO Holdings (-96%) ▲Hanwha Systems (-85%) ▲C&C International (-82%) ▲Hyundai Movex (-79%) posted results far short of market forecasts.
On the other hand, some corporations delivered better-than-expected results. Daewon Pharmaceutical's fourth-quarter operating profit last year was 5.8 billion won, 10 times the 600 million won consensus. The securities industry said a surge in flu and respiratory disease patients in winter drove the improvement.
Battery-materials corporation L&F posted 82.5 billion won in operating profit, topping the 18.7 billion won forecast by four times, and GC Biopharma also recorded 4.6 billion won in operating profit, well above the 1.1 billion won outlook. They were followed by CJ CGV (103.3%), Intellian Technologies (93.1%), Mirae Asset Securities (92.5%), and CJ ENM (79.8%), which performed well.
Among the largest stocks by market capitalization, strong results from major semiconductor corporations stood out. Samsung Electronics posted 20.0737 trillion won in operating profit, beating consensus by 8%, while SK hynix reported 19.1696 trillion won in operating profit, 16% above consensus.
But most key industries excluding semiconductors were generally weak. Hyundai Motor (1.6954 trillion won) and Kia (1.8425 trillion won) missed operating profit expectations by 37% and 1%, respectively. LG Energy Solution recorded an operating loss of 454.9 billion won, far deeper than the market's expected loss of 61.5 billion won.
The fallout from last year's fourth-quarter slump is darkening the outlook for the first quarter of this year. Among 146 listed companies with first-quarter operating profit estimates, 47% (68) have lower expectations than three months ago.
Market experts warn that geopolitical risks in the Middle East could further drag down earnings estimates for domestic corporations. If the situation drags on, increased volatility in oil prices and exchange rates could directly hit the refining, securities, and metals sectors.