Chemicals and Retail to Oil and Electronics: 6 out of 10 Listed Companies Deliver Second Quarter Earnings Surprises

Changing Landscape of Second-Quarter Earnings by Sector
Diverging Results for Samsung Electronics and SK hynix
Staggered Buying in Sectors with Strong Earnings Remains Effective

As listed companies finish releasing their earnings for the second quarter of this year, there has been a significant shift in the leading sectors that drove the earnings surprise in the previous quarter. Notably, 6 out of 10 listed companies outperformed market expectations (consensus).

According to financial information provider FnGuide on August 7, out of 141 listed companies for which at least three securities firms provided operating profit estimates by the 5th, 87 companies (61.7%) recorded operating profits exceeding the consensus. Following the first quarter, where 73 out of 119 companies exceeded expectations, strong earnings performance continued in the second quarter.

However, the industry landscape took on a different pattern. In the first quarter, sectors such as retail (with Hotel Shilla and others, showing a 705.0% gap between actual operating profit and consensus), chemicals (including POSCO Future M, 289.7%), electronic equipment and devices (such as Ecopro BM, 108.3%), and game software (including Krafton, 36.1%) led the earnings rally. In contrast, in the second quarter, new sectors such as oil and gas (SK Innovation, 65.6%), durable consumer goods (LG Electronics, 49.3%), shipbuilding (HD Korea Shipbuilding & Offshore Engineering, 38.1%), and medical equipment & services (InBody, 34.7%) joined the ranks of the earnings surprise group. Only the energy facilities and services sector (with Hanwha Solutions), maintained its top-tier status for both Q1 (184.4%) and Q2 (63.3%).

In the oil and gas sector, SK Innovation's performance stood out. Thanks to improved profitability in its battery and lubricant businesses in the second quarter, the company achieved an operating profit of 3.4873 trillion won, successfully turning a profit. Since the spin-off, the battery division reported its highest ever quarterly profit, while the oil refining and lubricant businesses continued to deliver solid results, helped by higher base oil margins stemming from geopolitical risks such as the U.S.-Iran war and a lagging effect (the time lag between input costs and product prices) resulting from oil price hikes.

In the oil and gas sector, SK Innovation's performance stood out. Thanks to improved profitability in the battery and lubricant businesses in the second quarter, the company achieved an operating profit of 3.4873 trillion won, successfully turning a profit.

Hanwha Solutions, which led the energy facilities and services sector, recorded profits for a second consecutive quarter across all its main businesses including renewable energy, chemical, and advanced materials. In the durable consumer goods sector, LG Electronics and Hyundai Livart performed strongly. LG Electronics saw improved results due to competitiveness in home appliances, the impact of sports events, and growth in its vehicle components business. A one-off profit of about 300 billion won was also recognized as the company received a full refund of previously paid tariffs from the U.S. government. Despite a sluggish construction market, furniture company Hyundai Livart posted a 9.4% year-on-year increase in second-quarter operating profit to 5.559 billion won, thanks to improved cost ratios — a result of efficient management that boosted profitability.

By company, the largest beats versus consensus were posted by SK Innovation (123.8%), HD Hyundai (85.8%), Hanwha Systems (76.2%), LX Hausys (75.6%), KG Steel (66.8%), Hanwha Solutions (63.3%), Hyundai Corporation (53.1%), Kakao Pay (52.1%), Poongsan (50.9%), and Hyundai Livart (50.2%). Hanwha Solutions was the only listed company to rank in the top 10 for two consecutive quarters.

On the other hand, the most significant misses were recorded by Green Cross Holdings (-80.7%), Handsome (-60.0%), SOOP (-50.6%), Korea Aerospace Industries (-45.6%), BH (-40.9%), LG Energy Solution (-39.8%), Partron (-33.2%), Hanwha Engine (-32.1%), BNK Financial Group (-27.3%), and Nexen Tire (-26.3%).

The earnings of major semiconductor stocks were mixed. Samsung Electronics posted second-quarter operating profit of 8.94924 trillion won, which was 5.5% above the market forecast (8.48367 trillion won), proving its strong profitability. In contrast, SK hynix recorded 6.05426 trillion won in second-quarter operating profit, falling 6.4% short of the consensus (6.46941 trillion won) due to, independently, the partial recognition of bonus reserves and the slowdown in DRAM shipment growth.

On the 7th, the KOSPI and KOSDAQ indices are displayed on the status board in the dealing room of Hana Bank in Jung-gu, Seoul. As of 9:02 a.m. this day, the KOSPI rose 72.76 points (1.16%) from the previous close to 6,369.14, and the KOSDAQ index also increased by 12.26 points (1.53%) to 813.93 from the previous close. Yonhap News Agency

Meanwhile, the domestic stock market opened higher this day before settling into a consolidation phase. After opening 1.09% higher at 6,365.07 from the previous session, the KOSPI was up 0.47% at 6,325.81 as of 9:55 a.m. At the same time, the KOSDAQ was down 0.64% at 796.50.

Overnight, the New York stock market closed lower. On the 6th (local time), the Dow Jones Industrial Average ended down 464.02 points (-0.85%) at 53,885.10 from the previous session. The S&P 500 fell 13.61 points (-0.18%) to 7,709.95, and the tech-heavy Nasdaq Composite lost 15.09 points (-0.06%) to close at 26,348.35. Investor sentiment was affected by a report from Iran’s Fars News Agency that the National Security Committee of Iran’s Majlis (parliament) was reviewing a bill to ban all ships from the U.S., Israel, and other hostile nations from passing through the Strait of Hormuz. Following this news, Brent crude oil futures rose 3.8% from the previous session to close at $82.49 per barrel.

Both SanDisk and Western Digital, U.S. memory semiconductor companies, saw their stock prices plunge after posting earnings. SanDisk beat forecasts for revenue and net income but dropped 6.81% as its forward guidance missed expectations. Western Digital outperformed expectations, but its share price fell 13.03% as growth was driven more by price increases than shipment growth. Micron dropped more than 7% intraday but rebounded to close up 1.31% on expectations for increased semiconductor spending spurred by a large-scale bond issue from Alphabet. SK hynix American Depositary Receipts (ADR) also plunged before paring losses to end down 4.97% at $143.53. The Philadelphia Semiconductor Index finished up 0.33%.

Jiyoung Han, researcher at Kiwoom Securities, said, “Unlike during the sharp decline in the first half when semiconductor blue chips led the rebound alone, the upward momentum is now expanding across the entire market. Rather than selling during rebounds, it would be better to maintain current positions or, if there is a further correction, use a strategy of phased buying focused on sectors with strong profit momentum, such as semiconductors, next-generation multilayer ceramic capacitors (MLCC), securities, distribution, and defense industries.”

This content was produced with the assistance of AI translation services.