ID :
33909
Thu, 12/04/2008 - 18:26
Auther :
Shortlink :
https://www.oananews.org//node/33909
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S. Korean firms' profitability drops, debts rise
SEOUL, Dec. 4 (Yonhap) -- South Korean companies' profitability fell sharply in
the third quarter of the year as a weaker won led to heavy foreign exchange
losses that overshadowed their increased sales, the central bank said Thursday.
The ratio of local companies' pre-tax net profit to sales, a key barometer of
profitability, reached 2.8 percent in the July-September period, compared with
6.7 percent the previous quarter, according to the Bank of Korea (BOK). The
central bank surveyed a total of 1,624 listed companies that close their books on
Dec. 31.
The BOK said their profitability deteriorated sharply in the third quarter as a
weak won resulted in foreign exchange losses, causing them to post a huge
non-operating deficit. The won shed more than 13 percent against the greenback
during the same period.
The ratio of local companies' operating income to sales, another key barometer of
profitability, came in at 5.9 percent in the third quarter, down 1.7 percentage
points from the previous quarter, due to increased costs of raw materials such as
oil.
On the other hand, sales increased 28.6 percent from a year earlier on the back
of increased prices of products, it said.
Meanwhile, the ratio of debt to equity grew at a faster pace in the third quarter
from three months earlier amid a credit squeeze. The ratio reached 104.3 percent
at the end of September, up 8.9 percentage points from the previous quarter,
according to the central bank.
"The won's drop against the dollar inflated converted values of their foreign
currency debts, and their borrowings increased as well," said a BOK official.
The data comes as the South Korean economy, Asia's fourth-largest, grew 0.5
percent on-quarter in the third quarter, the lowest rate in four years, largely
due to falling exports and weak demand.
With fears of a worldwide recession growing, South Korea faces increasing
downside risks for the export-driven economy.
"Given a downward trend of exports and domestic demand, their business
performance may further worsen down the road," the official said.
sam@yna.co.kr
(END)
the third quarter of the year as a weaker won led to heavy foreign exchange
losses that overshadowed their increased sales, the central bank said Thursday.
The ratio of local companies' pre-tax net profit to sales, a key barometer of
profitability, reached 2.8 percent in the July-September period, compared with
6.7 percent the previous quarter, according to the Bank of Korea (BOK). The
central bank surveyed a total of 1,624 listed companies that close their books on
Dec. 31.
The BOK said their profitability deteriorated sharply in the third quarter as a
weak won resulted in foreign exchange losses, causing them to post a huge
non-operating deficit. The won shed more than 13 percent against the greenback
during the same period.
The ratio of local companies' operating income to sales, another key barometer of
profitability, came in at 5.9 percent in the third quarter, down 1.7 percentage
points from the previous quarter, due to increased costs of raw materials such as
oil.
On the other hand, sales increased 28.6 percent from a year earlier on the back
of increased prices of products, it said.
Meanwhile, the ratio of debt to equity grew at a faster pace in the third quarter
from three months earlier amid a credit squeeze. The ratio reached 104.3 percent
at the end of September, up 8.9 percentage points from the previous quarter,
according to the central bank.
"The won's drop against the dollar inflated converted values of their foreign
currency debts, and their borrowings increased as well," said a BOK official.
The data comes as the South Korean economy, Asia's fourth-largest, grew 0.5
percent on-quarter in the third quarter, the lowest rate in four years, largely
due to falling exports and weak demand.
With fears of a worldwide recession growing, South Korea faces increasing
downside risks for the export-driven economy.
"Given a downward trend of exports and domestic demand, their business
performance may further worsen down the road," the official said.
sam@yna.co.kr
(END)
