Korean companies grew and remained profitable in first quarter

The Bank of Korea building [YONHAP]

Korean companies had a difficult first quarter but remained profitable overall and grew, albeit slowly, according to research from the central bank.

In a survey of 1,799 listed and 1,965 unlisted non-financial companies, all of which subject to external audit, the Bank of Korea found that sales in the first quarter were down by 1.9 percent on year. That compares with a 0.5 percent drop in the fourth quarter last year.

Total assets grew by 1.5 percent in the first quarter on year.

Manufacturing company sales fell 1.9 percent in the first quarter on year, compared with a 2.4 percent drop in the previous quarter on year. Non-manufacturing company sales flipped to a 1.9 percent on-year decline in the first quarter from a 2.2 percent on-year increase in the fourth quarter.

Service business sales dropped by 2.1 percent on-year in the first quarter, compared with a 3.3 percent gain in the fourth quarter on year. It was the worst performance for services since the second quarter of 2015. In terms of services, restaurant and hotel sales fell 14.6 percent in the first quarter on year from the 12.1 percent drop the previous quarter.

Operating profit to sales came in at 4.1 percent in the first quarter, down 1.2 percentage points year-on-year.

The ratio in manufacturing was 5.7 percent, up from 3.5 percent in the same period a year earlier. Non-manufacturing companies reported a 5.3 percent operating profit to sales ratio, compared with 4.6 percent a year earlier. In services, the ratio was 4.3 percent in the first quarter, down from 5.3 percent a year earlier.

The debt-to-equity ratio was 88 percent in the first quarter, up from 84.3 percent in the first quarter 2019. In manufacturing, the figure was 68.9 percent, up from 65 percent. For non-manufacturing companies, it was 120.8 percent, compared with 117.5 percent a year earlier.

Bond payables to total assets increased from 25.1 percent in the previous quarter to 25.3 percent this year in the first three months.

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]