Lowest Profitability
The profitability of Korean companies deteriorated to a record low last year.
According to a survey on 464,000 companies unveiled by the Bank of Korea on October 20, the average ratio of pre-tax net profit to sales was 3.4 percent last year, the lowest since 2009, when the central bank began to compile the related data.
The figure has been swinging, 3.9 percent in 2009, rising to 4.9 percent in 2010 but falling again to 3.7 percent in 2011.
Sales grew 5.1 percent annually in 2012, sharply down from 12.1 percent in the previous year.
The survey said that the worsened performances last year were largely owing to weaker economies home and abroad.
The Korean economy grew 2 percent last year, the slowest in three years, as the European fiscal crisis and the consequential global recession hurt Korea’s economy, which depends largely on exports.
The Korean central bank said their debt ratio fell slightly last year, but they benefited from low borrowing costs.
Their average debt to equity ratio stood at 147.6 percent last year, down from 152.7 percent a year earlier.