6 out of 10 local firms post better earnings than expected

SEOUL, May 1 (Yonhap) -- Nearly 6 out of every 10 local firms that have filed their first quarter earnings had better results than earlier forecast, market data showed Sunday.

However, less than half of them saw their stock prices climb following their earnings disclosure, partly due to what local experts called gloomy outlooks and investors locking in early gains.

According to market researcher FN Guide, out of the 73 local firms that filed their Q1 earnings and had their earnings estimated by at least three local brokerages, 43, or 59 percent, reported better performances than the market consensus.

Also, 28 firms, or 38.4 percent of the total, reported earnings surprises, where their actual earnings exceeded market consensus by more than 10 percent.

For instance, tech giant Samsung Electronics Co. posted an operating profit of 6.68 trillion won (US$5.86 billion) in the January-March period that exceeded earlier market estimates by 18.83 percent.

LG Life Sciences, a leading pharmaceutical firm, has reported an operating profit that dwarfed market consensus by over 350 percent.

Such earnings surprises, however, did not immediately lead to a rise in stock prices.

Out of the 28 firms that reported earnings surprises, less than half of them, or about 45 percent, had their stock prices rise as of Thursday, according to Kim Se-chan, a researcher at Daishin Securities Co.

"This is partly because market expectations for better results are often reflected in stock prices prior to earnings disclosures that could lead to a rise in profit-taking activities following the disclosure," Kim said.

Meanwhile, the FN Guide data showed the number of local companies that reported earnings shocks came to 14 in the first quarter. An earnings shock comes when a company reports earnings that are more than 10 percent less than market expectations.

bdk@yna.co.kr
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