What Caused the 1.7% Drop in S. Korean Large Firms' Operating Profit in H1 2025?
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Synopsis
In an increasingly uncertain economic landscape, South Korea's major firms, excluding SK hynix, reported a concerning 1.7% drop in operating profits for the first half of 2025. Discover the factors at play and the implications for the industry in this insightful analysis.
Key Takeaways
- 1.7% decrease in operating profit for major firms excluding SK hynix.
- SK hynix's profit surged due to AI demands.
- Samsung Electronics faced a 33.4% drop in profits.
- Operating losses were reported by several firms, indicating sector challenges.
- Overall sales increased by 5.5%, showing resilience in the market.
Seoul, Aug 17 (NationPress) Prominent South Korean corporations, excluding the semiconductor leader SK hynix Inc., experienced a 1.7 percent decline in operating profits during the first half of this year compared to the previous year, as ongoing economic uncertainties persist, according to industry data released on Sunday.
Data from corporate analyst CEO Score revealed that 342 of the nation's top 500 companies by sales, which reported their half-year results, achieved a combined revenue of 1,655.3 trillion won for the January to June timeframe, marking a 5.5 percent increase year-on-year.
The total operating profit for these firms grew by 5.9 percent to reach 118.5 trillion won, as reported by Yonhap news agency.
However, when excluding SK hynix—whose operating profit soared to 16.7 trillion won during this period—the collective operating income of the other companies showed a 1.7 percent decrease from the previous year.
SK hynix's operating profit nearly doubled from 8.4 trillion won last year, fueled by a surge in demand for high bandwidth memory (HBM) due to the AI computing boom.
Tech leader Samsung Electronics reported an operating profit of 11.4 trillion won in the first half, reflecting a 33.4 percent drop from the previous year.
Hyundai Motor Co. registered 7.2 trillion won in operating profit, followed by Korea Electric Power Corp. at 5.9 trillion won and Kia Corp. with 5.8 trillion won.
Conversely, battery manufacturer Samsung SDI Co. faced an operating loss of 831.9 billion won, while SK Energy Co. and Lotte Chemical Corp. reported operating deficits of 591.6 billion won and 377.1 billion won, respectively.
Meanwhile, SK hynix reported that its second-quarter operating profit exceeded 9 trillion won ($6.53 billion) for the first time, driven by the surging demand for AI chips, including HBM.
In a regulatory announcement, the company disclosed a record operating profit of 9.21 trillion won for the April to June quarter, which is a 68.5 percent increase from a year prior, establishing a new quarterly record.
Revenue surged by 35.4 percent year-on-year to reach 22.23 trillion won, while net income skyrocketed by 69.8 percent to 6.99 trillion won.
Both operating profit and sales surpassed the previous all-time highs set in the last quarter of the previous year.
Point of View
It is imperative to acknowledge the complexities surrounding the reported decline in operating profits for South Korean firms. This trend raises questions about the broader economic environment and the necessity for strategic adaptability within the corporate sector. The reliance on specific sectors, such as AI and memory chips, indicates a need for diversification and resilience in the face of ongoing uncertainties.
NationPress
06/10/2025
Frequently Asked Questions
What caused the decline in operating profits?
The decline in operating profits among major South Korean firms is attributed to ongoing economic uncertainties, despite a rise in overall sales for the period.
How did SK hynix perform compared to others?
SK hynix reported a significant increase in operating profit, nearly doubling from the previous year, which significantly impacted the overall profit figures of the major firms.
Which companies reported operating losses?
Samsung SDI Co., SK Energy Co., and Lotte Chemical Corp. all reported operating losses during the first half of 2025.
What trends are impacting the semiconductor market?
The demand for high bandwidth memory (HBM) driven by advancements in artificial intelligence (AI) is a crucial factor influencing the semiconductor market.
What is the outlook for South Korean firms?
The outlook remains cautious, as firms must adapt to the changing economic climate while leveraging opportunities in high-demand sectors like AI.
