Why Did S. Korean Large Firms Experience a 1.7% Drop in Operating Profit in H1 2025?
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Synopsis
In a challenging economic climate, major South Korean companies, excluding SK hynix, faced a 1.7% decline in operating profits in H1 2025. The rise of AI and semiconductor demand primarily influenced the financial landscape, revealing both challenges and opportunities for the industry.
Key Takeaways
- 1.7% decline in operating profits for major firms excluding SK hynix.
- SK hynix reported a record 16.7 trillion won in operating profit.
- Samsung Electronics faced a 33.4% decrease in profits.
- Several companies reported significant operating losses.
- The demand for AI technology is driving growth in the semiconductor sector.
Seoul, Aug 17 (NationPress) In the first half of 2025, major South Korean corporations, with the exception of the semiconductor leader SK hynix Inc., reported a 1.7 percent decline in their operating profit compared to the same period last year due to ongoing economic uncertainties, as indicated by industry data released on Sunday.
Data from corporate analyst CEO Score revealed that 342 of the nation's top 500 firms by revenue, who disclosed their semi-annual results, achieved a total of 1,655.3 trillion won in sales from January to June, marking a 5.5 percent increase year-on-year.
In terms of aggregated operating profit, there was a 5.9 percent rise compared to the previous year, reaching 118.5 trillion won, according to reports from Yonhap news agency.
However, when SK hynix is excluded, the collective operating profit of these firms dropped by 1.7 percent year-on-year. SK hynix recorded the highest operating profit of 16.7 trillion won for the period, nearly doubling from 8.4 trillion won a year prior, fueled by increased demand for high bandwidth memory (HBM) in the rapidly expanding field of artificial intelligence (AI) computing.
In the second position, tech leader Samsung Electronics reported an operating profit of 11.4 trillion won, which is down 33.4 percent from the previous year.
Hyundai Motor Co. achieved 7.2 trillion won in operating profit, while Korea Electric Power Corp. and Kia Corp. followed with 5.9 trillion won and 5.8 trillion won respectively.
On the other hand, battery manufacturer Samsung SDI Co. faced an operating loss of 831.9 billion won, and SK Energy Co. and Lotte Chemical Corp. reported operating deficits of 591.6 billion won and 377.1 billion won, respectively.
In a noteworthy development, SK hynix announced that its second-quarter operating profit exceeded 9 trillion won (approximately $6.53 billion) for the first time, driven by escalating demand for AI chips, particularly high bandwidth memory (HBM).
In a regulatory update, the company recorded an operating profit of an unprecedented 9.21 trillion won for the April-June period, representing a 68.5 percent increase compared to the previous year, thus setting a new quarterly record.
Sales rose sharply by 35.4 percent year-on-year to 22.23 trillion won, while net income surged 69.8 percent to 6.99 trillion won.
Both operating profits and revenues surpassed the previous record highs established in the last quarter of the previous year.
Point of View
We acknowledge the challenges faced by major South Korean firms amid fluctuating economic conditions. While the decline in operating profits is concerning, the growth in sectors like AI and semiconductors showcases resilience and adaptability. It is crucial to monitor these trends closely and support companies in navigating this complex landscape.
NationPress
21/11/2025
Frequently Asked Questions
What contributed to the decline in operating profit for South Korean firms?
The decline in operating profit for South Korean firms, excluding SK hynix, can be attributed to ongoing economic uncertainties and market fluctuations.
How did SK hynix perform in H1 2025?
SK hynix performed exceptionally well, reporting an operating profit of 16.7 trillion won, nearly doubling from the previous year, driven by rising demand for AI-related products.
Which companies reported significant losses?
Companies like Samsung SDI Co., SK Energy Co., and Lotte Chemical Corp. reported significant operating losses during this period.
What is the outlook for the South Korean economy?
The outlook remains cautiously optimistic, with sectors like AI and technology showing potential for growth despite the current challenges.
How do operating profits impact the overall economy?
Operating profits are crucial as they reflect a company's financial health and can influence investment decisions, employment, and economic stability.
