Sales dropped, but profit margins edged up in Corporate Korea last year, the Bank of Korea said Friday.
According to the central bank’s survey of business performance at nearly 20,000 companies in Korea, revenues were down 2.4 percent in 2015 from a year earlier, led by manufacturers, which posted an average 4.2 percent drop.
Profit margins, as a ratio of operating profit to revenue, increased to 5.2 percent from 4.2 percent during the same period. This means the companies earned an operating profit of 52 won (4 cents) with every 1,000 won sale.
“The uptick in profitability can be attributed to the Korean currency’s depreciation and falling prices of oil and commodities,” Park Sung-bin, an official at the BOK, told a press briefing.
Slowing sales point to slowing growth.
A further look at the revenue data confirms a prevailing concern about Korea’s slowing manufacturing engine, which drove the country’s growth for decades.
Manufacturing revenue grew 1.2 percent in 2013, but swung to contraction of 1.9 percent last year. The year 2015 saw the contraction worsen to 4.2 percent.
By company size, the slump in sales was more palpable among big companies. Large firms, which posted revenue growth of 1.3 percent in 2013, saw their sales shrink by 0.7 percent in 2014, worsening to 3.8 percent in 2015.
Korea’s economic growth was 2.6 percent in 2015, the weakest in three years, as exports, led by large manufacturers of electronic devices and cars, plunged on a slowdown in China and other emerging economies.
The Korean won’s value against the dollar was 7.4 percent lower than the previous year. The average won-dollar exchange rate was 1,131.5 won per dollar, compared to 1,153.3 a year earlier.
The companies’ interest coverage ratio, which shows their ability to honor debt payments, improved 413.8 percent in 2015 from 329.1 percent.
Still, 28 out of every 100 companies surveyed were unable to pay interest with their earnings. The proportion of those with interest coverage ratio below 100 percent marked a slight decline of 0.7 percentage point to 28.1 percent in 2015.
By Lee Sun-young (
milaya@heraldcorp.com)
