Hyundai Electronics' first-half net losses widened

Hyundai posted net loss of 349.5 billion won in the first half

SEOUL (MaxisNet) - Hyundai Electronics Industries KS, one of South Korea's two semiconductor giants, said its first-half net losses widened despite a doubling in sales.

Analysts said the results were in line with expectations but ongoing concerns about liquidity troubles at other Hyundai units could have a negative impact on the chipmaker's share price.

Hyundai said it posted a net loss of 349.5 billion won ($313.6 million) in the first half, compared with a 125 billion won net loss a year earlier.

Its operating profit soared to 619.4 billion won, up sharply from a 24.3 billion won profit a year ago. But Hyundai's recurring losses snowballed to 628.6 billion won in the first half from 183.5 billion a year earlier as non-operating expenses surged, including losses from sales of its shares in other Hyundai Group affiliates and a plant in Scotland.

The company said its sales almost doubled to 4.38 trillion won in the first six months, versus 2.25 trillion won in first half 1999. Analysts said they maintained buy recommendations for Hyundai Electronics, but with caution that shares could suffer in the near term as investors remained nervous about the liquidity squeeze at the Hyundai Group, the country's largest conglomerate.

"Earnings momentum in the second half of 2000 is clearly positive," Jonathan Dutton, analyst at UBS Warburg, said in a report. "The DRAM market continues to improve as does cash flow." Hyundai is the world's largest maker of dynamic random access memory (DRAM) computer chips in terms of capacity.

Surging demand for DRAM chips and short supply stemming from wider Internet applications and continued strong demand for mobile phones and appliances powered by semiconductors are likely to buoy the DRAM market until the latter part of 2002 at least.

But analysts said sentiment on the Hyundai Group could continue to deteriorate over the next six months, raising serious issues surrounding Hyundai Electronics' ability to refinance its maturing debts.

Troubled Hyundai Group is now under pressure to come up with a new restructuring plan to help allay market concerns about liquidity crunch at its construction unit.

Hyundai's main creditor, state-run Korea Exchange Bank, has requested a detailed reform plan by August 19.