[Edaily Reporter kyoungeun kim ] As the won-dollar exchange rate hits a new low for the year and emerges as a key variable affecting corporate earnings, analysts predict that the impact of the exchange rate will vary significantly by sector and company. While the decline in pre-tax profits in the fourth quarter due to the won’s appreciation is expected to average about 11% across all sectors (649 major domestic listed companies) compared to the first half of the year, the utilities (electricity, gas, and water) and transportation sectors are expected to benefit. Additionally, pre-tax profits in the semiconductor sector, which holds a large proportion of foreign currency assets, are projected to see a limited decline in the 2% range.

According to MP Doctor, as of 3:30 p.m. on the 8th, the won-dollar exchange rate was trading at 1,345.6 won, up 5.1 won from the previous trading day’s closing price. This marks a steep short-term decline from the second quarter’s high of 1,559 won. The previous day, the won-dollar exchange rate fell to 1,334.7 won during trading on the Seoul foreign exchange market, hitting a year-to-date low.
The sharp decline in the exchange rate is attributed to an increase in dollar supply driven by strong exports. Analysts explain that this is the result of a combination of factors: the redemption of SK hynix American Depositary Receipts (ADRs) in July, followed by follow-on dollar sales by exporters, and expectations of additional dollar supply stemming from semiconductor companies’ announcements of shareholder returns in late August.
Kwon Ah-min, an analyst at NH INVESTMENT & SECURITIES, stated, “Recently, corporate-driven dollar supply stemming from strong exports has been more prominent than dollar demand, leading to the sharp decline in the exchange rate.” He added, “While structural dollar demand—such as from retail investors trading U.S. stocks and foreign direct investment (FDI)—has not disappeared, given the stronger-than-expected corporate supply of dollars, the average exchange rate is expected to remain around the 1,300 won level through the fourth quarter.”
The won’s appreciation is expected to begin exerting a full impact on exchange rates starting in the fourth quarter, putting pressure on the earnings of export-oriented companies. This is because a decline in export competitiveness and a reduction in operating profit when converted to won are inevitable due to the won’s appreciation.
According to NH INVESTMENT & SECURITIES, based on the closing price on the 3rd (1,359 won) compared to the first-half average exchange rate (1,483 won), the estimated decline in pre-tax profit due to the won’s appreciation in the fourth quarter is -10.93%. Annual pre-tax profit is also projected to fall by -3.14%. However, the impact varies by sector. Sectors with a pre-tax profit decline exceeding 5% include healthcare equipment and services (-7.92%), Hotels, Restaurants, and Leisure (-6.64%), Electronics and Electrical Products (-6.54%), Pharmaceuticals and Biotechnology (-6.15%), Durable Consumer Goods and Apparel (-5.85%), Capital Goods (-5.12%), and Energy (-5.11%). Among these, the energy sector ranked seventh in terms of percentage but suffered the largest absolute loss (estimated at over 7 trillion won) of any sector, making it the hardest-hit sector in absolute terms.
While profit declines are expected across most sectors, utilities and transportation are projected to benefit from the appreciation of the Korean won. The sector expected to benefit the most is utilities, with annual pre-tax profits projected to actually increase by 2.67%. The transportation sector also saw a 0.14% increase and was identified as a sector benefiting slightly. These sectors have a structure where foreign currency liabilities—such as crude oil and fuel costs, as well as aircraft lease payments—that must be settled in dollars exceed their foreign currency assets. Companies like KoreanAirLines, which faces significant aircraft lease burdens, and LOTTE rental are cited as prime examples of beneficiaries of the won’s appreciation.
The “semiconductors and semiconductor equipment” sector—a key pillar of the domestic stock market—saw a relatively modest profit decline of -2.22%. Although semiconductor companies appear sensitive to exchange rates at first glance, given that exports account for as much as 90% of their revenue, the actual size of their foreign currency assets and liabilities (foreign exchange position) is not large compared to their total profits. Although the decrease amounted to 15.8228 trillion won—the largest in absolute terms compared to other sectors—the impact of the profit decline due to exchange rate fluctuations is believed to have been largely diluted when considering the sector’s overwhelming profit scale, as exemplified by companies like SamsungElectronics and SK hynix.
Kim Kyu-jin, an analyst at NH INVESTMENT & SECURITIES, said, “While the semiconductor and semiconductor equipment sectors appear to face a significant reduction in won-denominated profits based on scale alone, the magnitude of the profit decline is very low relative to their total profit base.”