South Korean companies publicly trading on the country’s main Kospi bourse saw their operating profit fall nearly 40 percent on year in the first six months of this year due to reduced global demand from worsening trade tensions between the United States and China and higher labor costs at home.

According to data released by Korea Exchange and Korea Listed Companies Association on Monday, the combined operating profit of 574 non-financial members on the Kospi whose fiscal year ends December reached 27.17 trillion won ($22.49 billion) on a consolidated basis in the April-June period, down 37.4 percent from a year ago. Their combined net profit plunged 47.6 percent on year to 16.58 trillion won, while sales inched up 1.5 percent to 504 trillion won during the same period.

For the first six months, their combined operating profit slid 37.1 percent, while sales added 0.8 percent from the previous year. Combined net profit also shriveled 42.9 percent to 37.49 trillion won, marking the biggest fall for the first half since the new accounting standards were adopted in 2011.

Unfavorable trade conditions hit big corporate names harder than smaller-cap companies.

The operating margin of 198 names in the big category with assets over 5 trillion won averaged 5.5 percent in the April-June period, deteriorating sharply from 9.2 percent two years ago and underperforming average 5.6 percent of small- and mid-sized enterprises.

The sharp fall largely owes to the change of fortune for chipmaking giants whose stellar performance from a two-year chip boom entered a bust cycle this year on top of multiple setbacks on the trade front, bringing down the overall financial numbers for the Korean Inc.

By Moon Il-ho and Lee Ha-yeon

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]