Overview
Second-quarter operating profit refers to the profit a company earns from its operating activities during the period from April to June of the relevant fiscal year. It is calculated by subtracting the cost of sales and selling, general, and administrative expenses from revenue, and is widely used as an indicator of a company's core profitability for investment decisions. As a benchmark for gauging the midpoint of half-year performance, it characteristically reflects seasonal factors and economic trends.
Main Content
Definition and Calculation of Operating Profit
Operating profit = Revenue - Cost of sales - Selling, general and administrative expenses (excluding non-operating income/expenses) ...
Also, operating profit margin = Operating profit / Revenue × 100 ...
Because operating profit refers to profit generated from a company's core business activities, it is distinguished from non-operating income and expenses such as interest costs, foreign exchange gains/losses, and investment income.
Importance of Second-Quarter Operating Profit
- Intermediate indicator for half-year earnings announcements: enables forecasts of overall first-half performance
- Reflects seasonal factors: in the second quarter, rising temperatures boost demand for cooling appliances, beverages, travel, and leisure industries
- Earnings surprise/shock: second-quarter earnings releases increase market volatility
- Industry-specific characteristics: some sectors concentrate earnings in the fourth or first quarter, so cross-industry comparisons are necessary
Factors Affecting Second-Quarter Operating Profit
- Seasonality: weather, vacation season, consumption patterns
- Exchange rates and raw material prices: for export companies, the won/dollar exchange rate, international oil prices, and raw material prices such as iron ore
- Domestic economy: consumer sentiment, government policies (consumption stimulus, interest rate cuts, etc.)
- One-off factors: provisions, voluntary retirement costs, exchange rate effects, etc.
Second-Quarter Operating Profit Characteristics by Industry
- Consumer goods: seasonal beneficiaries such as beverages, beer, and air conditioners
- Automobiles and shipbuilding: relatively little seasonal impact
- Construction: earnings reflected from increased construction starts in the second quarter
- IT and semiconductors: off-season, but sensitive to the global economy
- Financials: focus on net profit rather than operating profit, affected by interest rates
Considerations in Analysis
- Check growth rates compared with the same period a year earlier and with the previous quarter together
- Examine the operating profit margin trend, cash flow, and earnings quality
- Distinguish recurring operating profit after excluding one-off factors
- Check the gap from market expectations (consensus)
Recent Trends
Second-quarter operating profit trends in 2024 and 2025 showed notable divergence by industry amid global economic uncertainty. In the second quarter of 2024, semiconductor market recovery led Samsung Electronics and SK Hynix to post significant improvements in operating profit, while the secondary battery sector struggled due to slowing demand. In the second quarter of 2025, semiconductor and server companies delivered solid earnings on the back of expanded investment in artificial intelligence (AI) infrastructure, but consumer goods and construction industries saw operating profit shrink owing to weak domestic demand. In particular, China's economic slowdown and the US-China trade conflict exerted downward pressure on the operating profits of export companies. In addition, with high interest rates persisting, interest cost burdens increased, and some companies recorded net losses separate from their operating profits.
Related Topics
- [[Operating Profit]]
- [[Revenue]]
- [[Earnings Surprise]]
- [[Half-Year Report]]
- [[Seasonality]]