Both Sales and Profits Falling
Almost half of KOSPI-listed companies’ sales and operating profits fell year on year for the first nine months of this year.
According to data released by the Korea Economic Research Institute on Dec. 13, 268 out of the 578 companies listed on the stock exchange witnessed a year-on-year decline in sales during the period. The ratio, 46.4%, increased approximately 14 percentage points from the previous year. In addition, operating profits decreased in 344 companies. The ratio had been 41.2% in 2016, but rose to 52.6% in 2017 and 59.5% this year.
In 209 companies, sales and operating profits fell alike. The number was 146 last year. Meanwhile, the number of companies in which both sales and operating profits rose is 175, down 25% from a year ago.
The institute explained that the ratio of listed companies in the red has increased since 2016 and that of those in the black has decreased since that year. Specifically, the former, which had fallen from 17.5% to 13.3% between 2013 and 2016, rose to 20.1% in the first three quarters of this year. The ratio of those that went into the red rose from 5.5% to 10.4% between 2016 and this year whereas the ratio of those that went into the black fell from 9.5% to 4.2% between 2015 and this year. Likewise, the ratio of those that remained in the red for the second consecutive year rose from 6.6% to 9.7% from 2017 to 2018.
In the meantime, the Bank of Korea announced on Dec. 13 that South Korean companies’ year-on-year sales growth was 3.5% in the third quarter, down 1.3 percentage points from the previous quarter. Although their profit-to-sales ratio edged down from 7.7% to 7.6%, it is 5% when Samsung Electronics and SK Hynix are not included in the calculation.