Korean firms' profitability improves despite slow sales gain in 2014

South Korean companies' profitability improved slightly from a year earlier in 2014 despite the pace of their sales growth slowing to a record low, central bank data showed Tuesday.

In 2014, sales of local firms rose 1.3 percent from a year before, slowing from a 2.1 percent on-year gain in the previous year, according to the data from the Bank of Korea. The 2014 figure marks the lowest level since the central bank began compiling such data in 2002.

The annual report is based on a survey of 530,641 firms here that close their books in the June-December period, excluding non-profit organizations and financial firms.

Other indicators of growth also showed signs of a slowdown with the growth of total assets slowing to a 4.3 percent on-year gain last year from a 4.6 percent increase in the previous year.

Amid a slow growth in sales, the average ratio of the companies' operating profit to sales came to 4 percent, down 0.1 percentage point from a year earlier.

However, their net profit improved with the average ratio of pre-tax income to sales gaining 0.4 percentage point from the previous year to 3.3 percent in 2014.

The local firms also saw their financial stability improve in 2014 despite their sluggish growth in sales, according to the BOK.

The companies' average debt-to-equity came to 134.5 percent at the end of 2014, down from 141 percent a year earlier.

The debt ratio of large companies dropped to 127 percent from 133.5 percent, while that of smaller firms also dipped to 161.4 percent from 168.3 percent over the cited period. (Yonhap)