Unstable Business
The Korea Exchange and the Korea Listed Companies Association announced on November 15 that 511 KOSPI-listed companies recorded 392.5277 trillion won (US$351.3 billion) in sales, down 2.79% from a year ago, in the third quarter of this year and their net profits and operating profits fell 6.4% to 20.7591 trillion won (US$18.5 billion) and increased 5.44% to 28.9923 trillion won (US$25.9 billion) during the same period, respectively.
“The companies’ total sales for the first three quarters of this year edged down by 0.49% from a year earlier to 1.186 quadrillion won (US$1.06 trillion),” they explained, adding, “During the period, however, their operating profits and net profits rose 11.67% and 10.79% to 91.9629 trillion won (US$82.3 billion) and 68.3671 trillion won (US$61.1 billion), respectively.”
Those companies’ operating profit-to-sales ratio increased by 0.58 percentage points to 7.39% whereas their net profit ratio fell 0.2 percentage points to 5.29%. The number of those in the black was about three times that of those in the red. Specifically, 385 companies were in the black in the third quarter.
Experts point out that their recent performance is a typical example of an increase in profit not supported by sales growth that is attributable to a lasting recession and it has its own limits. “The listed companies’ sales are unlikely to rebound until the first half of next year in view of today’s global economic conditions,” said Ji Ki-ho, head of the LIG Investment & Securities Research Center. He went on to warn that their operating profits can fall once internal and external conditions deteriorate to a greater extent.