ID :
175341
Thu, 04/14/2011 - 06:59
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https://oananews.org//node/175341
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S. Korean firms' profitability improves in 2010
SEOUL, April 14 (Yonhap) -- South Korea's overall corporate profitability improved last year amid global economic recovery, but exporters fared far better than domestic-oriented companies, the central bank said Thursday.
The average ratio of operating profit to sales, a key barometer of profitability, reached 6.7 percent in 2010, up from 5.5 percent a year earlier, the Bank of Korea (BOK) said in a report based on a survey of 1,517 companies.
The 2010 number was the highest since an identical 6.7 percent seen in 2007.
But there was a sharp gap in profitability and financial soundness between exporters and domestic-focused firms, indicating that overall corporate growth was driven by bigger companies.
"Corporate profitability improved last year as exports increased amid the global economic recovery, but the division between exporters and non-exporters deepened in terms of business performances," Yang Jae-ryong, director of the BOK's monetary and financial statistics division, said at a press conference.
The BOK said exporters were more profitable and healthier than domestic-focused companies. Sales by exporters rose 20.2 percent last year, compared with a 13.4 percent expansion of sales by non-exporters.
"If exporters' price competitiveness remains intact, this trend is likely to continue," Yang said.
The average ratio of debt to equity, a barometer of corporate indebtedness, reached 95.2 percent as of the end of last year, down from 102 percent the previous year. The debt ratio fell below the 100 percent mark for the first time since 2007.
By sector, the local construction industry suffered a setback with its cash flows severely deteriorated after it was hit by sour project financing loans.
As local builders were not able to meet financial needs through business activities, they had to rely on borrowing from banks, squeezing their cash flows.
The data came as the South Korean economy grew 6.2 percent last year on the back of robust exports and improved domestic demand. The central bank said the economic growth is widely expected to slow down to 4.5 percent this year and inflation will likely grow 3.9 percent.
The average ratio of operating profit to sales, a key barometer of profitability, reached 6.7 percent in 2010, up from 5.5 percent a year earlier, the Bank of Korea (BOK) said in a report based on a survey of 1,517 companies.
The 2010 number was the highest since an identical 6.7 percent seen in 2007.
But there was a sharp gap in profitability and financial soundness between exporters and domestic-focused firms, indicating that overall corporate growth was driven by bigger companies.
"Corporate profitability improved last year as exports increased amid the global economic recovery, but the division between exporters and non-exporters deepened in terms of business performances," Yang Jae-ryong, director of the BOK's monetary and financial statistics division, said at a press conference.
The BOK said exporters were more profitable and healthier than domestic-focused companies. Sales by exporters rose 20.2 percent last year, compared with a 13.4 percent expansion of sales by non-exporters.
"If exporters' price competitiveness remains intact, this trend is likely to continue," Yang said.
The average ratio of debt to equity, a barometer of corporate indebtedness, reached 95.2 percent as of the end of last year, down from 102 percent the previous year. The debt ratio fell below the 100 percent mark for the first time since 2007.
By sector, the local construction industry suffered a setback with its cash flows severely deteriorated after it was hit by sour project financing loans.
As local builders were not able to meet financial needs through business activities, they had to rely on borrowing from banks, squeezing their cash flows.
The data came as the South Korean economy grew 6.2 percent last year on the back of robust exports and improved domestic demand. The central bank said the economic growth is widely expected to slow down to 4.5 percent this year and inflation will likely grow 3.9 percent.
