Manufacturing sentiment recovers, but 60% of companies say "This year's operating-profit target will be difficult to achieve"

[Financial News] Business outlook indices for export-oriented and domestic-demand companies both rose, indicating that manufacturing sentiment recovered for a second consecutive quarter. Positive expectations spread among export-driven industries such as semiconductors and cosmetics, but operating conditions remain challenging, with six in 10 manufacturing companies expecting to fall short of their operating-profit targets this year. 
The Korea Chamber of Commerce and Industry said on the 27th that its survey of 2,413 manufacturing companies nationwide found that the manufacturing Business Survey Index (BSI) for the fourth quarter of 2026 stood at 86, up 6 points from 80 in the previous quarter. 
The BSI for export-oriented companies stood at 91, up 5 points from the previous quarter, supported by strong exports of key products such as semiconductors and cosmetics. The BSI for domestic-demand companies also rose by 7 points to 85 as a stable exchange rate eased the burden of imported raw material costs. As a result, the indices for export-oriented and domestic-demand companies rose together for the first time in five quarters since the third quarter of last year. 
The number of industries expecting business conditions to improve in the following quarter also increased from the previous quarter. In the third quarter, only semiconductors, at 113, exceeded the benchmark of 100. In the fourth quarter, the number rose to five: semiconductors, cosmetics, medical and precision industries, shipbuilding, and pharmaceuticals and biotechnology. The semiconductor sector, at 139, posted its highest figure since the survey began and remained above the benchmark of 100 for four consecutive quarters. Cosmetics, at 120, and medical and precision industries, at 108, rose by 20 points and 28 points, respectively, from the previous quarter, recording the most positive outlooks after semiconductors. 
Although the manufacturing business outlook index rose for a second consecutive quarter on the strength of several key industries and improving sentiment among export-oriented and domestic-demand companies, the survey found that six in 10 companies expect to miss their operating-profit targets. Companies expecting their operating profit this year to fall short of their initial targets accounted for 60.4%. Those expecting to meet their targets accounted for 31.7%, while only 7.9% anticipated exceeding them, including 6.4% expecting to exceed their targets by up to 10% and 1.5% expecting to exceed them significantly. The largest obstacle to achieving operating-profit targets was rising production costs, including raw materials and energy, cited by 43.2% of companies. This was followed by worsening sales and order conditions at 24.9%, rising labor costs and difficulties in securing workers at 11.7%, exchange-rate volatility at 6.8%, a worsening trade environment at 4.1%, and regulations, permits, and other institutional factors at 1.3%.
Kang Min-jae, head of KCCI's Economic Policy Team, said, "As rising production costs, including raw materials and energy, have emerged as companies' biggest challenge, policy support is needed to improve the business environment, including stabilizing the supply of raw materials and easing the burden of energy costs." 

[email protected] Im Su-bin Reporter