Conglomerates’ R&D investments rise 11% despite lower sales

South Korea’s large businesses increased investment in research and development by around 11 percent throughout the year despite declines in sales, according to data from a local market tracker released Wednesday.

The aggregate investments of 211 major companies stood at 39.2 trillion won ($33.7 billion) as of the third quarter, up 11.3 percent from the 35.2 percent recorded during the same period last year, showed a report from corporate researcher CEO Score.

The 211 firms are among the country’s top 500 companies, which disclose their R&D expenditures through the regulatory filing system.

By contrast, their sales dipped 0.8 percent to 1,254 trillion won for the past three quarters.

The increase in R&D investment amid lower sales suggests a sense of urgency to secure growth momentum for the future despite adverse conditions in the global business environment, the report mentioned.

The country’s biggest conglomerate, Samsung Electronics, invested a total of 15.28 trillion won as of September, representing the largest amount of corporate investment this year.

The tech giant’s R&D investments jumped 14.6 percent from the same period last year. 

Other sizable tech businesses such as LG Electronics, SK hynix, Hyundai Motor, LG Display, Naver and Kia Motors followed suit with investments of over 1 trillion won.

Meanwhile, due to lower sales, the proportion of R&D costs to sales grew 2.79 percent to 3.13 percent overall.

In terms of the investment-to-sales ratio, portal operator Naver topped the list with 25.96 percent, pushing last year’s winner Celltrion into second place.

Biopharmaceutical firm Celltrion’s R&D figure edged up 0.06 percentage points to 25.57 percent, but stood slightly lower than Naver’s.

Samsung came in 16th with 8.97 percent, since its sales amounted to 170.5 trillion won.

By Song Su-hyun (song@heraldcorp.com)