Korea's big four trading houses post 48% jump in operating profit

South Korea's four major general trading houses — Posco International, LX International, Samsung C&T's trading division and Hyundai Corporation — delivered strong results despite persistent uncertainty in global supply chains. Rising profitability in their trading businesses, along with gains from LNG, solar power and other new ventures, pushed their combined operating profit up nearly 50% in a year. The companies are expected to further expand into food, data centers and other new business areas to sustain the momentum.

The four trading houses posted combined second-quarter sales of 21.92 trillion won ($15.3 billion) and operating profit of 751.7 billion won, up 24.2% and 48.1%, respectively, from 17.65 trillion won and 507.7 billion won in the same period last year.

Posco International led the group with second-quarter operating profit of 429 billion won, a record for any single quarter and a 26.9% increase from 338.1 billion won a year earlier. Sales rose 14.4% to 9.62 trillion won. Samsung C&T's trading division saw operating profit surge 77.5%, from 80 billion won to 142 billion won. LX International and Hyundai Corporation posted operating profit of 117.8 billion won and 62.9 billion won, up 114.2% and 81.6%, respectively.

Global supply chain disruptions that deepened after the outbreak of war in the Middle East turned out to be an opportunity for the trading houses. As international trade flows were disrupted by a range of external pressures, the role of trading companies as supply chain connectors grew more prominent. A won-dollar exchange rate that has remained elevated compared with previous years also boosted profitability, since trading margins are collected in dollars.

Core businesses beyond trading also performed well. Resource operations were a key driver at both Posco International and LX International, which benefited from higher energy prices in the wake of the Middle East conflict.

Senex Energy, an Australian natural gas producer and Posco International subsidiary, posted second-quarter operating profit of 33.2 billion won, more than triple the 9.9 billion won recorded a year earlier. Operating profit from Posco International's Myanmar gas field also rose 6%, from 139.8 billion won to 148.1 billion won over the same period.

LX International's resource division posted operating profit of 21.6 billion won, a 148.3% increase. "Nickel prices rose at the AKP nickel mine in Indonesia, and the palm business benefited from an upturn in palm oil market conditions," an LX International official said.

Solar power was a standout for Samsung C&T's trading arm. In the first half of this year alone, gains from solar development project sales reached $32 million. Hyundai Corporation's expansion into automotive parts — including an acquisition last year — also contributed positively to its earnings.

All four trading houses plan to identify new growth engines to sustain the upward trend. Posco International has been investing heavily in its palm business. In June, it completed the acquisition of Indonesian palm company Sampurna Agro, now known as PT.ART, for 1.3 trillion won. PT.ART will serve as the core of Posco International's palm seed operations. The deal gives the company a vertically integrated value chain spanning seed development, plantation management and refining.

LX International is reviewing additional investments in mines and smelters to secure a battery materials value chain. Samsung C&T's trading arm is pursuing entry into data center development — the strategy involves acquiring promising sites early and then selling operational rights to big tech companies or asset managers during the initial infrastructure phase.

Hyundai Corporation has set aside a record investment budget for this year and is pursuing buyout deals. In March, it invested 3.6 billion won to acquire a 60% stake in Seokchung Korea, a company that recycles end-of-life solar modules.