The three major entertainment agencies, SM Entertainment (KOSDAQ: 041510), YG Entertainment (KOSDAQ: 122870), and JYP Entertainment (KOSDAQ: 035900), have published their earnings reports for the first half of 2013. The new reports showed that the combined total sales of all three agencies have hit a new high for the industry with both YG Entertainment and JYP Entertainment showing improved results compared to the same period last year.
For people that don’t like reading lots of numbers the results can be summarized as such.
- Combined Sales for the 3 agencies broke new records at approximately $155 million USD (An increase of $53 million USD compared to 2012)
- SM Entertainment has broken new sales records at $96.31 million USD, but has seen substantial profit losses for the first half of 2012 due to substantial losses in music exports and increase in expenses
- YG Entertainment has broken every record, sales, operating profits and net profits. However, it was still below investor expectations and they expect less growth through the year due to the absence of the YG Family Concert and 2NE1’s Arena Tour this year
- JYP Entertainment continued to see losses, but managed to reduce them somewhat. Parent company JYP might potentially be better off
Now that is out of the way, here is the full results for the three agencies in SM Entertainment, YG Entertainment and JYP Entertainment order.
The published reports show that the three KOSDAQ listed agencies earned total combined sales of approximately $155 Million USD in the first half of 2013 (Converted at current exchange rates of 1000 KRW to 0.90 USD). This figure is a new sales record with the three agencies earning total combined sales of approximately $102 Million USD during the same period last year. This is approximately a 50% increase in total sales.
Given the fact that the three agencies take up a substantial portion of the overall K-pop industry in terms of market share and revenue, the new increased figures show that the industry is still relatively healthy and showing healthy year over year growth rates.
The total combined sales split over the three agencies are as thus. SM Entertainment’s total sales for the 1st quarter of 2013 were approximately $51.3 million USD and combined sales for the first half of 2013 were approximately $96.31 Million USD. Sales figure wise, this is SM Entertainments best results since being listed on the KOSDAQ a decade ago.
However all is not well SM Entertainment despite increased sales. Operating Profits for the 2nd quarter of 2013 were approximately $3.29 million USD and combined operating profits for the first half of 2013 were approximately $7.86 million USD. Net profit for the 2nd quarter was USD$626,739 with combined net profit for the first half of 2013 approximately USD$2.4 Million.
SM Expects EXO’s rise in the Chinese Market to help improve their profitability in the latter half of 2013
But big numbers are meaningless without some context, so here is the context. Second quarter operating profits are down 32% year over year, 1st half Operating Profits are down 6o% YOY with 2nd Quarter net profit down 54% YOY. SM Entertainments attributes this loss to a 68% decrease in exports for their music sales and a 47% increase in overall expenses. However, SM Entertainment expects to see improved results in the 2nd half of the year with successful sales of EXO’s album (Currently selling over 700,000 units), f(x)’s album along with concert sales for DBSK, Super Junior along with their large scale SM Town concerts being held across the globe.
SM C&C will continue to aggressively expand their field of operations
SM’s new contents division, SM C&C, is also expected to do its part to increase overall profitability for SM Entertainment in the 2nd half of 2013, which will be aggressively pushing new business ventures like mobile gaming, video content production, and acquisitions of rival production groups such as Woolim Entertainment.
Meanwhile YG Entertainment has once again enjoyed another quarter of increases. YG Entertainment’s total combined sales for the 2nd Quarter of 2013 was approximately $27.5 million USD with total combined sales for the first half of 2013 coming to approximately $54 million USD. This is a 49% YOY increase in total sales for the first half of the year and is YG’s best ever results since being listed.
Profits were also positive for YG Entertainment with second quarter operating profits coming to approximately $4.95 million USD with combined operation profits for the first half of 2013 coming to approximately $10.62 million USD. Context wise, Operating profits for the first half of 2013 rose 53% compared to 2013 and were once again YG’s best ever results.
New albums like Seungri’s second Album expected to increase music sales for YG in the 3rd quarter of 2013
The string of good results continued to agency’s net profits with 2nd quarter net profits at approximately $4.93 million USD and combined net profits for the first half of 2013 sitting at approximately USD$8.68 million. The results mean that YG Entertainment has seen its first half net profits rise 47% YOY and the results are once again a new record for YG Entertainment. However, the results were lower than expected due to an absences of music sales in the first half of this year.
However the lack of a YG Family Concert in 2013 is expected to reduce overall sales in 2013
YG Entertainment, however, expects a much healthier third quarter thanks to the release of albums from Kang Seung Yoon, G-Dragon, Seungri along with G-Dragon’s concerts. However the weakening of the Yen might affect their growth for the rest of the year along with the absences of major concerts this year such as the YG Family Concert and 2NE1’s Arena Tour. Also of note was the relative disappointment of PSY’s “Gentlemen” compared to “Gangnam Style.”
Finally, JYP Entertainment (A subsidiary of the parent non-listed company, JYP) saw decent first half results for 2013. Total sales for the 2nd quarter were approximately $2.5 million USD with combined sales for the first half of the year coming to approximately $5.08 million USD, which is a staggering 92% YOY increase.
Advertising revenue from artists like Suzy continue to make up a sizable portion of JYP Entertainment’s overall sales
In terms of operating profits, JYP Entertainment saw losses of approximately $1.2 million USD in the 2nd quarter and combined operating losses for the first half of the year comes to approximately $2.1 Million USD. Net Losses were also approximately $1.4 million USD and $2.36 million USD for the 2nd quarter and combined first half respectively. Despite continuing to run losses on their business, JYP Entertainment has managed to reduce their losses YOY with 1st half operating losses dropping 8% and net losses dropping 8.3%.
2PM activities might have helped increase sales for parent company, JYP
Despite losses seen by subsidiary JYP Entertainment, parent company JYP might have seen increased sales. Results for parent company JYP are unknown as they are a non-listed company. Artists such as Wonder Girls, 2PM and 2AM are contracted under the parent company while Park Jin Young and Miss A is contracted under the subsidiary company, JYP Entertainment.