Export Profitability
Researcher Lee Han-deuk at the LG Economic Research Institute said in his report on June 29 that Korean exporters’ profitability has deteriorated significantly since the second half of last year due to the ongoing appreciation of the won, even though their non-exporting counterparts have regained a positive sales growth rate.
The won-dollar exchange rate, which had been at around 1,100 won per U.S. dollar from 2010, reached an average of 1,087 won in the second half of 2013, 1,069 won in the first quarter of this year, and 1,017 won as of May 27. The rate is about to break the 1,000 won mark for the first time in six years since early 2008.
In Q1 this year, the sales growth rates of the exporters (with an export ratio of 50 percent or higher) and domestic enterprises (with an export ratio of less than 50 percent) in Korea were negative 1.8 percent and 3.2 percent compared to the same period of last year, respectively. The latter’s profitability was higher in the same quarter, too.
The higher the export ratio was, the poorer the management results were. In 2012, the quarterly average operating profit rates of the domestic enterprises and exporters had been 3.9 percent and 3.7 percent each. However, the percentages were 4.0 percent and 2.7 percent each in 2013. In addition, those with an export ratio of over 80 percent recorded a sales growth rate of 1.8 percent last year, whereas those with an export ratio of 40 percent to 80 percent showed negative average sales growth.