Korea Inc.’s expansion was tepid in 2015

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Korea Inc.’s expansion was tepid in 2015

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Korean companies were profitable last year but faced low revenue growth, a sign that local companies are struggling in efforts to expand.

A report released by the Bank of Korea Sunday tracked 574,851 companies of all types and sizes, excluding the finance sector, to measure different financial performances.

The companies’ sales growth in 2015 was 0.3 percent compared to the previous year. The growth trend has been downward since 2010, when revenue galloped 15 percent. The year-on-year growth rate ebbed to 2.1 percent in 2013 and 1.3 percent in 2014.

By size of the companies, revenue growth of big companies decreased 4.7 percent in 2015 compared with 2014’s 0.4 percent. On the other hand, small and medium-sized firms’ growth fell from 8 percent in 2015 to 4.4 percent in 2014.

Sales growth among manufacturing companies declined 3 percent last year, as the country’s key industries, including shipping, shipbuilding and automobiles, all face unfavorable market conditions and stiff competition from China.

The central bank noted that the sharp fall in petrochemical companies’ sales decline contributed to the overall fall in the manufacturing field.

“Petrochemical and metal producers drove the decline in the manufacturing sector’s revenue growth,” the Bank of Korea said in a statement.

Petrochemical players pulled down the chart with a sales volume decrease of 15.2 percent last year as oil prices nosedived.

The sales decline among manufactures accelerated over time as the segment contracted 1.6 percent in 2014, followed by a 0.5 percent increase in 2013.

Still, Korea’s operating profit-to-sales ratio slightly improved last year, reaching 4.7 percent compared with 2014’s 4 percent. In 2013, the rate was 4.1 percent.

In terms of profitability, manufacturers did well: their operating profit-to-sales ratio jumped 5.1 percent from a year ago.

Total assets of the companies, including both manufacturers and non-manufacturers, also maintained robust growth.

Assets rose by 5.7 percent in 2015 over a year earlier, following 4.3 percent in 2014.

The debt-to-capital ratio of the surveyed companies fell to 128.5 percent in 2015 from 134.5 percent in 2014.

“Manufacturing companies except for transportation equipment saw reduced debt ratios last year,” the Bank of Korea noted.

“In the non-manufacturing circle, electricity producers and the real estate sector reduced their debt ratios.”

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]
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