Korean firms suffer further setback in Q3 sales, profit

South Korean companies continued to suffer heavy setbacks in their sales and profits in the third quarter, central bank data showed Tuesday, apparently due to a sharp decline in exports and slowing demand at home.

The average sales of local companies plunged 2.8 percent from a year earlier in the three months that ended Sept. 30, according to the data from the Bank of Korea.

It compares with a 1.1-percent on-year dip in the second quarter.

The BOK did not provide any specific reason for the drop, but the country's exports have been on a steady decline since December 2018 in the face of the lengthy trade row between the United States and China -- the country's top two trading partners -- and a sharp decline in prices of chips, a key export item for Asia's fourth-largest economy.

The sales of manufacturing firms shrank 3.8 percent on-year in the July-September period, accelerating from a 1.7 percent on-year drop in the second quarter, while those of non-manufacturing industries slipped 1.4 percent in the third quarter, also accelerating from a 0.3-percent drop three months earlier.

With a sharp drop in sales, local companies also suffered a setback in their profitability with their operating profit to sales ratio declining to 4.8 percent in the third quarter from 5.2 percent in the April-June period.

Their debt ratio, on the other hand, remained unchanged at 83.5 percent.

The quarterly report is based on a survey of 3,764 local businesses, including 2,301 manufacturers, with more than 12 billion won ($10.3 million) in assets that are subject to external audits. (Yonhap)