Recession Type Surplus
According to analysis, companies listed on the Korea Stock Composite Price Index (KOSPI) failed to free themselves from the yoke of “recession trade surpluses,” where profits grow but sales drop up until the third quarter of this year. KOSDAQ-listed companies, however, many of which are small and mid-sized companies, enjoyed the growth of sales, operating income and net income, performing well in terms of both quality and quantity.
The Korea Stock Exchange and the Korea Listed Companies Association analyzed 498 out of KOSPI-listed 588 companies which have to submit consolidated financial statements to the Korea Stock Exchange and settle accounts in December. They announced the results on Nov. 17. Their total sales in the third quarter totaled 1.205 quadrillion won (US$1.027 trillion), down 3.24 percent from a year before. During the same period, their total operation income and net income swelled 12.69 percent and 11.31 percent to 77.4781 trillion won (US$66.0702 billion) and 78.6740 trillion won (US$67.0900 billion), respectively.
A total of 394 companies (79.12 percent) listed on the KOSPI market inked net income, while 104 companies (20.88 percent) suffered net losses. Their operating income to sales ratio edged up by 0.91 percentage points to 6.44 percent, while their net income to sales ratio inched down by 0.61 percentage points to 4.69 percent. Excluding Samsung Electronics, which has a big chunk in their total sales, consolidated sales were still on the skids, but profitability was clearly on the uptick.
Their sales were down 3.13 percent, while their operating income and net income grew 16.71 percent and 24.31 percent, respectively. Their debt ratio inched down. At the end of the third quarter, their debt ratio sat at 124.26 percent, down 3.06 percentage points from the close of 2014.
But the outlook on the stock market is still gloomy. This is because an increase in their income was more attributable to temporary cost-cutting effects than to a business boom. In addition, the effects of income increased were reflected in some companies only. So, it is said that the fact still does not come across as positive to the overall stock market.
By contrast, companies listed on the KOSDAQ performed relatively well. Analysis says that increases in sales, operating income and net income indicate that they enjoyed both qualitative and quantitative success.
In particular, IT, financial and distribution companies came up with strong business performances, taking the lead in the market. Analysis of 635 out of 709 companies that have to submit their third quarter consolidated financial statements to the KOSDAQ market and settle accounts at the end of December, shows that they posted 91.9 trillion won (US$78.4 billion) in total sales, up 6.68 percent from a year earlier. Their total operating income and net income in the third quarter jumped 10.95 percent and 12.82 percent to 5.0292 trillion won (US$4.2884 billion) and 3.5451 trillion won (US$3.0225 billion), respectively. Both their operating income to sales ratio and net income to sales ratio increased 0.21 percentage points to 5.48 percent and 3.86 percent, respectively, from a year earlier.