Korea Inc.’s revenues are on a decline

Home > Business > Economy

print dictionary print

Korea Inc.’s revenues are on a decline

Big Korean companies saw steep falls in second-quarter sales due to weak exports and a commodities prices slump, but managed to see profitability grow modestly and remained in sound financial health, according to a Bank of Korea report on Tuesday.

The BOK’s study of over 3,000 companies of all sizes showed that their second-quarter sales declined 4.3 percent compared with a year before.

Manufacturers were hit particularly hard, with sales down 6.3 percent year on year, while non-manufacturing companies saw a 1.3 percent fall.

In terms of company size, conglomerates suffered a 5.7 percent year-on-year drop in sales, and conglomerate manufacturers reported a 7.5 percent fall, the biggest quarterly falls since the BOK started compiling such data in the third quarter of 2003.

Small and medium-sized firms, however, saw a 2 percent increase in sales, a turnaround from the previous quarter when sales dipped 0.6 percent year on year.

“A drop in prices of such commodities as crude oil, gas and iron ore brought about declines in prices of processed products, slashing conglomerates’ sales sharply,” said Park Seong-bin, a senior official in charge of corporate statistics at the BOK.

“The sales drop has also led to a decline in exports.”

Sales declines were led by petrochemical companies, 15.9 percent, and metals manufacturers, 6.6 percent. Electricity and natural gas related firms saw 11.4 percent declines.

Non-manufacturing small and medium sized companies saw strong sales growth of 5.9 percent. Among conglomerates, textile and clothing manufacturers saw a 5.8 percent increase in sales.

Despite the overall falls in revenue, however, the profitability of the companies actually improved, as falls in raw material prices also cut manufacturing costs.

The companies’ ratio of operating profit to sales rose to 5.6 percent from 4.8 percent a year ago, while the ratio of net income to sales rose to 4.8 percent from the previous 4.6 percent.

Conglomerates’ operating profit ratio surged to 5.3 percent from 4.3 percent, while those of small and medium-sized firms increased to 6.8 percent from 6.7 percent.

Despite their sharp falls in sales, oil and petrochemical manufacturers saw their operating profit ratio grow to 8.7 percent from 2.6 percent a year before, while textile and clothing manufacturers saw their operating profit ratios also grow to 6.0 percent from previous 5.4 percent.

“Falls in commodities prices have improved margins for some companies,” Park added.

Companies appeared to be in sounder financial health. The studied companies’ debt-to-assets ratio was 104.2 percent, down from 105.7 percent during previous quarter.

BY PARK JUNG-YOUN [park.jungyoun@joongang.co.kr]

More in Economy

Central bank holds rates steady, adjusts up GDP forecast

Restaurant coupons to make a comeback as an app

[INTERVIEW] Korea Forest Service head sees huge opportunity in Indonesia

Tapped out and hunkered down, Korea stares recession in the face

Property owners get big tax shock

Log in to Twitter or Facebook account to connect
with the Korea JoongAng Daily
help-image Social comment?
lock icon

To write comments, please log in to one of the accounts.

Standards Board Policy (0/250자)

What’s Popular Now