Q2 saw good growth in revenue and profits

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Q2 saw good growth in revenue and profits

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Growth of Korean companies’ revenues hit a five-year high in the second quarter largely thanks to spikes in the electrical machinery and equipment industry, particularly semiconductors.

Companies’ profitability improved as well, according to a report by the Bank of Korea released Thursday.

According to the BOK, companies’ revenues increased an average of 8 percent in the second quarter compared to a year earlier.

The study was based on a survey of 3,324 companies, of which 78.3 percent answered.

This was the biggest year-on-year increase since the first quarter of 2012, when revenues rose an average of 10.4 percent. The companies’ revenues overall have seen positive growth in the last three consecutive quarters, with the figure advancing each quarter.

In the last three months of 2016, revenues for Korean companies inched up 0.8 percent. In the January-to-March quarter, they surged 7.9 percent.

Revenue increases in the second quarter were buoyed by the electrical machinery and equipment industry, including semiconductors. That industry’s revenues rose 19.8 percent from a year earlier. Sales of metal products including steel grew 10.9 percent.

Semiconductor sales have been seeing sharp increases thanks to development of advanced technologies such as artificial intelligence, the Internet-of-Things, big data and robots.

There are already projections that Samsung Electronics’ revenues from semiconductors in the third quarter will increase 20 percent compared to the previous quarter’s 21 trillion won ($18.5 billion).

Compared to a year ago, the manufacturing sector in the second quarter saw revenues grow 8.4 percent.

This is a stark contrast to the second quarter of 2016 when revenues declined 2 percent.

Revenues in the non-manufacturing sector also saw significant improvement in the second quarter, up 7.3 percent compared to a year earlier.

“While there was the fact that the companies’ revenues were so low last year that the figures for this year naturally increased, companies’ performances improved on the back of favorable growth in exports,” said a BOK official.

Profitability improved as well. In the second quarter the for surveyed companies was 7.2 percent, an improvement from a year ago’s 6.9 percent. It was also an improvement from the previous quarter’s 7 percent.

Manufacturers’ profit-to-revenue ratio was 8.4 percent in the second quarter compared to 7.4 percent a year earlier.

On the flip side, non-manufacturing companies’ profitability fell from 6.8 percent in the second quarter of 2016 to 5.4 percent this year.

Conglomerates saw an 8.5 percent increase in revenues year-on-year, a sharp turnaround from a 2.3 percent decline in the second quarter of 2016. It was also faster growth than the 8.1 percent in the first three months of this year.

Revenues for small and medium-sized enterprises (SMEs) grew 5.5 percent, also a turnaround from a 0.2 percent dip in the second quarter of 2016.

But growth slowed from the first quarter’s 6.7 percent increase.

Conglomerates fared better because of the good performance of the export sector.


BY LEE HO-JEONG [[email protected]]
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