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Korea manufacturers’ trillion won club to nearly triple

29 manufacturers to report 1 trillion won or more in operating profit in 2022 vs. 11 in 2021

By Aug 01, 2021 (Gmt+09:00)

Hyundai Motor's production line. Hyundai is a regular member of the trillion won club.
Hyundai Motor's production line. Hyundai is a regular member of the trillion won club.

The number of the trillion won club of South Korean manufacturing sector is set to nearly triple this year even as a resurgence in the COVID-19 is expected to drag the global economic growth.

Manufactures are likely to bear fruit from their preemptive investment and rapid response to changes, as well as bold restructuring amid a global commodity super cycle, the industry sources said.

“The improvement in the industry’s constitution has shone through during a crisis as they focused on new growth sectors such as chips, batteries and new materials through investment for the future,” said an industry source.

According to the Korea Economic Daily’s data based on corporate earnings in the first half and market consensus, 29 manufactures are forecast to report operating profit of 1 trillion won ($868.1 million) or more each this year, joining the trillion won club, compared to 11 in 2020. The members' number for this year would be the highest with eight new faces likely to join.

Those new members include Samsung SDI Co., HMM Co., Korea Zinc Co., Kumho Petrochemical Co., Hanwha Solutions, Hyundai Glovis Co., Hyosung TNC Corp., and LG Innotek.

Four refiners – SK Innovation Co., GS Caltex, S-Oil Corp. and Hyundai Oilbank Co. – and six other manufacturers such as Samsung Electro-Mechanics, Samsung C&T Corp., LG Display Co., Lotte Chemical Corp., Doosan Heavy Industries & Construction Co. and Hyundai Steel are expected to return to the club.

Samsung Electronics Co., Hyundai Motor Co. and SK Hynix, the club's regulars, are almost certain to maintain memberships this year.

The stellar performance comes although South Korea’s economy is not out of the woods yet with the record-breaking COVID-19 infection. Asia’s fourth-largest economy is forecast to grow 3.8% this year, partially due to a base effect compared to a 0.9% contraction in 2020, the first decline since the 1997-98 Asian financial crisis.


Petrochemicals, steels and shipping industries led strong growth in the country’s manufacturing sector as hopes for a global economic recovery along with excessive liquidity injected by governments in the worlds to cope with the COVID-19 ramped up commodity such as crude oil and iron ore.

Refiners, which suffered losses of more than 5 trillion won in total last year, are set to be back to the trillion won club. S-Oil and Hyundai Oilbank reported 1.2 trillion won and 678.5 billion won in operating profit in the January-June period, record-highs for any half-year earnings, respectively. Both generated more than half of the profit from non-refining products such as propylene and lubricant.

Lotte Chemical is predicted to post operating profit of 1.2 trillion won in the first half thanks to improvement in spreads for key products such as olefins and aromatics. Hanwha Solutions reported 475.7 billion won during the period, a notch below of 594.2 billion won for the whole of 2020.
Yeosu complex in the South Jeolla Province, South Korea
Yeosu complex in the South Jeolla Province, South Korea

Samsung SDI, competing with global electric vehicle (EV) battery makers, reported 295.2 billion won in operating profit during the April-June period with its battery business logging profit for the first time, increasing the profit for the first half to 428.3 billion won. Samsung Electro-Mechanics and LG Innotek are also forecast to post record-high earnings thanks to strong consumer sentiment.


Companies, which invested in future business for a long time, enjoyed heathy earnings. Kumho Petrochemical, the world’s top the acrylonitrile butadiene (NB) latex maker, reported 1.3 trillion in operating profit during the first half thanks to surging rubber glove demand due to the COVID-19. Kumho Petrochemical has been making steady investment in the NB capacity to raise its output to 640,000 tons a year since it started the business in 2008.

Hyosung TNC’s operating profit in the first half stood at 633.9 billion won, more than double of 266.6 billion won for 2020, given strong demand for comfortable outfits. The company began investment in spandex, a textile material widely used for making a wide range of garments such as yoga pants, hiking clothes and other sportswear, in 2007. It currently holds a third of the global spandex market.

Painful corporate restructuring enhanced some companies’ constitution. HMM Co., the country’s top container line, is expected to report operating profit of more than 2 trillion won in the first half. The shipper benefited more from the recent surge in freight rates amid a logistics crisis caused by the COVID-19 as it improved constitution through restructuring, introducing larger vessels and joining shipping alliances, industry sources said. HMM, formerly known as Hyundai Merchant Marine, was taken over by the state-run Korea Development Bank (KDB) in 2016 after the shipper accumulated huge losses amid an industry slowdown. Doosan Heavy Industries & Construction Co. is another case of successful restructuring as it turned into a renewable generator maker.
HMM's container ship
HMM's container ship

“Their unique optimization capabilities and efforts to secure technology were the driving force that enabled them to survive the crisis and reap the fruits during the recovery period,” said Ryu Sung-won, head of the industrial strategy team of the Federation of Korean Industries. “Once the economic recovery gather pace, they will be able to maintain the growth.”

Such strong performance is expected to help holding companies of those firms enjoy healthy earnings.

LG, Hanwha Corp., SK Inc., GS Holdings, Doosan Corp. and Hyundai Heavy Industry Holdings are forecast to report more than 1 trillion won in operating profit, according to market consensus.


Manufacturers’ earnings may slow down in the second half since more than half of the club members are refiners, petrochemical makers, shipbuilders and steel makers that are sensitive to economic cycles, some analysts are concerned.

There earnings are expected to stay strong in the third quarter at least, but they may lose momentum in the fourth, they said.

Refiners, which benefited from strong non-refining business such as lubricant, are likely face hurdles from increasing supply from the July-September period, for example. It is also unclear if refining margins, a key profitability indicator, recover given weak demand for jet fuel on the Delta variant.

The petrochemical industry’s heyday was over in the first half as increasing supply from China will put pressure on South Korean makers.

“If new supply is added in Asia from the third quarter, that will hurt domestic petrochemical companies’ earnings,” HI Investment & Securities analyst Jeon Yoo-jin.

The shipbuilding sector is likely to falter in the second half. Orders for containers, which led a surge in overall contracts in the first half, could slow down in the second, according to a recent report from the Export-Import Bank of Korea.

Write to Jung-hwan Hwang, Kyung-Min Kang and Jeong Min Nam at

Jongwoo Cheon edited this article.

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