Samsung’s Profit Plunge Signals Broader Downturn Across South Korea’s Key Industries (Image supported by ChatGPT)
SEOUL, July 8 (Korea Bizwire) — South Korea’s industrial giants are bracing for a sobering second quarter, as Samsung Electronics’ steep earnings miss reverberates across the country’s core sectors — including autos, steel, batteries, and refining — amid global economic headwinds and rising geopolitical trade barriers.
Samsung, long the bellwether of Korean corporate performance, reported a second-quarter operating profit of 4.6 trillion won ($3.3 billion), down nearly 56% from a year earlier and 23% below market expectations.
The company blamed a large inventory valuation loss in its semiconductor division for the shortfall, as demand softness and falling prices continued to plague its memory and foundry businesses.
The earnings disappointment at Samsung is not an isolated case. Major players in automotive, steel, energy, and battery manufacturing are also expected to report weaker-than-expected earnings due to a combination of slowing global demand and newly imposed U.S. tariffs under the Trump administration.
This photo, provided by Hyundai Motor Group, shows the group’s headquarters in southern Seoul. (Image courtesy of Yonhap)
Auto Giants Feel the Tariff Strain
Hyundai Motor and Kia, cornerstones of Korea’s export economy, are forecast to post modest revenue gains but double-digit declines in operating profit. Analysts attribute this to U.S. tariffs that raised costs while pricing remained flat in key markets. Despite maintaining sales volume in North America — which now represents about a quarter of their global sales — both automakers struggled to protect margins.
However, the second half may offer a partial recovery, with Hyundai’s U.S.-based Meta Plant America expected to improve utilization and benefit from cost controls.
This undated file photo shows the corporate flag of POSCO Holdings. (Image courtesy of Yonhap)
Steel Sector Faces Bleak Outlook
Steelmakers have been among the hardest hit. POSCO Holdings and Hyundai Steel are both expected to post year-on-year operating profit declines of 13% and 7.5%, respectively, as they absorb the brunt of 50% U.S. tariffs on steel products. With weakening global demand, the industry is turning to aggressive production cuts, including indefinite shutdowns at certain facilities.
LG Energy Solution Ltd.’s research and development campus in Daejeon, central South Korea (Image courtesy of Yonhap)
Battery Sector: Mixed Signals
In the battery industry, the picture is mixed. Samsung SDI is projected to swing to a 224.4 billion won loss after posting profits in the same period last year, and SK On is also expected to report significant losses.
However, LG Energy Solution provided a rare bright spot. The company surprised the market with a 152% year-on-year surge in operating profit, buoyed by U.S. tax credits from the Inflation Reduction Act. Analysts expect further upside in the second half as North American and European plants ramp up and new subsidies take effect.
A view of a refinery located in South Korea (Yonhap)
Refining and Energy Weighed Down by Oil Prices
Oil refiners such as SK Innovation and S-OIL are likely to remain in the red for a second consecutive quarter. While refining margins have improved, falling global oil prices have offset gains. S-OIL’s losses are expected to deepen to over 245 billion won, and other major refiners, including GS Caltex and HD Hyundai Oilbank, are also projected to post weak results.
South Korea’s construction industry is showing signs of severe stress across all major indicators. (Image courtesy of Yonhap)
Construction Sector Shows Diverging Fortunes
The construction sector paints a more uneven picture. Firms like Hyundai Engineering & Construction, DL E&C, and HDC Hyundai Development Company are expected to post strong double- or triple-digit profit growth. In contrast, Samsung Engineering & Architecture and Daewoo E&C are forecast to report significant declines.
As investors look ahead, attention is turning to the second half of the year, when companies hope easing global uncertainty, increased production capacity, and favorable policy shifts — particularly in the U.S. and Europe — might help reverse the current trend. Still, the second-quarter performance underscores the fragile state of Korea’s export-driven economy in a volatile geopolitical landscape.
Kevin Lee (kevinlee@koreabizwire.com)
