South Korea's major companies reported weaker earnings than expected for the first quarter of the year, data showed Wednesday, which could further exacerbate the already-slowed local stock market.
The data compiled by market researcher FnGuide show that 25 out of 72 firms that released their first-quarter earnings missed market estimates, most of them construction, shipbuilding and petrochemical firms.
Samsung Heavy Industries Co., a major shipbuilder, reported an operating loss of 363 billion won ($354 million) during the first quarter, as it set aside a large amount of reserves against possible losses from deals to build offshore facilities. Brokerage houses expected an operating income of 218 billion won.
S-Oil Corp., the country's third-largest refiner, also failed to meet market estimates by reporting an operating income of 47.2 billion won for the first quarter. Securities firms had bet on an operating income of more than 100 billion won.
The corporate earnings outlook has been constantly downgraded since late last year as weaker-than-expected growth in the U.S. and China was feared to undercut their performance.
"The first-quarter business results were disappointing, although some companies released earnings surprises," said Bae Sung-young, an analyst at Hyundai Securities. "That would further sap market sentiment here, and it would take a long time for the market to move higher."
The country's key stock index, the Kospi, has been stuck in a tight range since late March. The index was boxed in at between 1,950 and 2,000 points for over a month.
LG Electronics Inc., a leading home appliance maker, and its affiliates were among those who beat estimates. LG Electronics' first-quarter operating income reached 504 billion won, up 44.2 percent from a year earlier amid solid gains in its home entertainment business. (Yonhap)