Jaebeol profits fall on stronger won, pricey oil

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Jaebeol profits fall on stronger won, pricey oil

Earnings by Korea’s major business groups declined for a second consecutive year in 2006, mainly due to high oil prices and the local currency’s rise against the U.S. dollar, the country’s top financial watchdog said.
The combined net profit of 1,025 companies affiliated with the country’s 25 conglomerates whose assets top 5 trillion won ($5.5 billion) fell 4.9 percent annually to 29.8 trillion won in 2006, marking the second consecutive yearly decline, according to the data released yesterday by the Financial Supervisory Service.
The conglomerates’ combined operating income also declined 4.4 percent year-on-year to 40.8 trillion won. However, their total revenue advanced 8.8 percent annually to 598.5 trillion won, with their combined assets gaining 12.4 percent to 710.4 trillion won.
Their net cash flow from their operating activities increased 13.6 percent year-on-year to 69.3 trillion won. Cash outflow from investment shot up 33.1 percent annually to 72.5 trillion won on increased capital spending, according to the service.
Meanwhile, the top five business groups ― Samsung, Hyundai Motor, SK, LG and Lotte ― reported a 9.8 percent dip in their combined earnings to 16.9 trillion won last year, with a 2.7 percent fall in their combined operating income to 23.3 trillion won.
The five conglomerates’ total revenue gained 7 percent year-on-year to 363.1 trillion won, with their assets increasing 9 percent to 436.1 trillion won, the watchdog said.
Last year, the Korean won advanced nearly 9 percent against the greenback. A stronger won makes Korean goods more expensive in overseas markets and erodes the converted value of their overseas earnings. The average price of Dubai crude rose 24.7 percent to $61.60 per barrel from $49.40 a year earlier. Yonhap
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