South Korean firms see spectacular growth

South Korean firms see spectacular growth

Agence France-Presse, Seoul

The first half profits of South Korean listed firms soared 156 percent to a record high this year despite a sluggish world economy, authorities said Thursday.

The Korea Stock Exchange (KSE) said 510 listed firms recorded a combined net profit of 17.44 trillion won (US$13.3 billion) in the six months to June, including 2.7 trillion won from foreign exchange gains.

First-half sales rose 0.7 percent from a year earlier to 253.4 trillion won and operating profit rose 10.7 percent to 20.5 trillion won, it said.

Average debt-to-equity ratios dropped to 113.2 percent from 128.99 percent a year earlier, a key indication of stronger fundamentals in the Korean economy.

The profit surge highlighted the improved financial structure of South Korean firms after four years' of reforms prompted by Asia's 1997-1998 financial crisis, the KSE said in a statement.

Stronger domestic demand also played a key role in boosting revenue, although the companies' performances are seen weakening in the second half.

Combined second-quarter net profit stood at 7.5 trillion won, compared to 9.9 trillion won in the first quarter. Operating profit shrank from 11.1 trillion won to 9.36 trillion won over the same period.

The net profit of 712 firms listed on South Korea's technology-heavy Kosdaq market also surged 51.2 percent to a record 1.53 trillion won in the first half, the KSE said.

Sales of the Kosdaq firms rose 17.3 percent to 29.3 trillion won, with their first-half operating profit up 21 percent at 2.39 trillion won.

Their second quarter net profit, however, halved to 574 billion won from 1.25 trillion win the first quarter, with operating profit down 20 percent at 1.06 trillion won.

Major conglomerates led by the country's largest, the Samsung group, showed remarkable progress in the first half, overcoming a host of uncertainties such as the won's soaring value, the KSE said.

The total first-half net profit of Samsung units rose 70 percent to 4.5 trillion won, including 3.8 trillion won recorded by Samsung Electronics Co., the world's largest memory chip maker.

The Hyundai Motor group was second with its net profit jumping 39 percent to 1.5 trillion won, followed by the SK group whose net profit surged to 1.5 trillion won from 645 billion won a year earlier.

The LG group posted a combined net profit of 277 billion won, compared to 125 billion won a year earlier.

The results reflect the change of focus by South Korean companies to profitability from expansion of sales and market share.

President Kim Dae-Jung, who has struggled to end reckless expansion by conglomerates, called Thursday for "ceaseless" corporate restructuring to strengthen competitiveness.