## Korean Listed Companies See Profitability Plunge in 2022, Rebound Expected in 2023
Korean listed companies experienced a significant decline in profitability last year due to the semiconductor downturn, according to the latest financial data. However, experts predict a recovery in the sector as the demand for AI and memory semiconductors picks up.
## Declining Earnings in 2022
The operating and net profits of KOSPI listed companies notably dropped in 2022. Data from the Korea Exchange, released on the 3rd, reveals that the combined operating profit of 615 listed companies for the fiscal year ending December was KRW 123.8 trillion, a 24.48% decrease from the previous year. While revenue slightly increased by 0.34% to KRW 2,825.2 trillion, net profit plummeted by 39.96% to KRW 80.9 trillion.
The downturn in memory semiconductors heavily impacted Samsung Electronics’ performance. For the same period, Samsung Electronics’ cumulative operating profit fell by 84.86% year-on-year to KRW 6.57 trillion, while net profit declined by 72.17%.
## Industry-Specific Impacts
Several sectors experienced declines in operating profits, including electronics (-87.06%), transportation and warehousing (-61.61%), paper and wood (-45.10%), and construction (-39.23%). Kim Hak-kyoon, head of the research center at Shinyoung Securities, noted that excluding semiconductors, only a few sectors, notably the automotive sector, saw profit increases.
## Optimistic Outlook for 2023
Experts forecast an improvement in listed companies’ earnings this year, buoyed by the growing demand for AI chips and the revival of memory semiconductor exports. Roh Keun-chang, head of research at Hyundai Motor Securities, anticipates that “Samsung Electronics will drive significant earnings growth this year, with net profits expected to increase by over 30% compared to last year. We project the stock market level could reach 2,900 based on earnings momentum.”
Similarly, Kim from Shinyoung Securities suggested that “with the improvement in semiconductor profits, the overall performance of listed companies is expected to improve compared to last year.”
## Challenges Remain
Despite the optimistic outlook for major companies, there are concerns about discrepancies in performance among different sectors. Jeong Yong-taek, senior research fellow at IBK Securities, highlighted, “While large companies led by Samsung Electronics are seeing better results, domestic-oriented and small enterprises are unlikely to see significant improvements compared to last year. Although the overall performance is improving, the disparity between sectors remains considerable, and caution is necessary.”
## Favorable Conditions Ahead
Kyung-min Lee, head of investment strategy at Daishin Securities, predicts a favorable environment for businesses in the latter half of the year. “We expect the profit growth rate to be around 50-60% this year compared to last year, maintaining over 20% growth next year. Considering this, earnings momentum will be very favorable for the market this year. We project the KOSPI level to reach a high of 2,850, and although there might be some hesitation in the second quarter, the environment will likely improve significantly in the latter half.”
Roh from Hyundai Motor Securities also expects a favorable environment for emerging markets, citing a positive outlook for semiconductors and potential interest rate cuts by the U.S. Federal Reserve within the year.
