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Chips, chemicals drive 74% gain in South Korean company profits

Exporters rebounded in 2021 while utilities, builders hurt by higher costs

An LG Chem plant. Operating profit at South Korean chemical manufacturers skyrocketed 350% last year. (Photo courtesy of LG Chem)

SEOUL -- Operating profit at South Korean listed companies surged 74% in 2021, as the country's core industries of electronics, chemicals and steel rebounded from the pandemic-induced global downturn the previous year.

Consolidated operating profit at 595 companies traded on the Korea Exchange rose to 183 trillion won ($150 billion) on revenue growth of 20%. Their operating margin reached 8%, up 2.5 percentage points.

But South Korea's widening gap between conglomerate-backed corporations and smaller companies persisted, as big exporters delivered strong results while restaurants and others hit hard by coronavirus-related restrictions struggled.

The data covered nonfinancial companies with December book-closings.

Profit grew 56% for the electronics industry, which includes powerhouses Samsung Electronics, LG Electronics and SK Hynix. The sector's increase was fueled by a recovery in memory chips and robust sales of TVs and other home electronics.

Operating profit at chemical groups -- such as LG Chem, Lotte Chemical and SK Innovation -- climbed about 350%. Higher crude oil prices were passed on to customers through price hikes for petrochemical products, while earnings in the fast-growing automotive battery business recovered.

The steel industry, whose members include Posco and Hyundai Steel, logged roughly 270% profit growth, buoyed by higher prices.

Profit rose 82% among service providers such as internet groups Naver and Kakao and game developers.

All 17 industries covered by the data recorded higher revenue, with 15 of them posting profit gains.

Utilities and builders were the exceptions. Earnings at electricity and gas companies were eroded by rising resource prices. Korea Electric Power suffered a record operating loss under a government policy of exiting nuclear power and keeping electricity prices low. Higher prices on building materials dealt a blow to the construction industry.

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