Companies Earned Only 39 out of 1,000 Won as Profits Last Year

Last year, the net profits of domestic companies dropped to the lowest level since the financial crisis in 2008. The rate of sales increases has slowed rapidly after 2010. Corporate business performance has worsened as well, as the economy is entering a depression.

According to the “2013 Provisional Results of Investigation on Company Activities” released by Statistics Korea on Nov. 25, the average net profit of domestic companies (except financial and insurance companies), which is the profits before deducting corporate taxes, was 39.2 won (US$0.0354) per 1,000 won (US$0.90), down by 8.0 won (US$0.0072) from a year earlier. This is the lowest price since the global financial crisis in 2008 (32.5 won, or US$0.0293).

The net profit per 1,000 sales won was 63.0 won (US$0.0569) in 2006 when Statistics Korea began investigating companies’ activities, 69.2 won (US$0.0623) in 2007, and down to 32.5 won (US$0.0292) in 2008.

After that, it increased to 53.3 won (US$0.0481) in 2009 and 62.3 won (US$0.0563) in 2010. It, however, decreased again with 51.7 won (US$0.0467) in 2011, 47.2 won (US$0.0426) in 2012, and 39.2 won (US$0.0354) last year.

Last year's total sales of companies amounted to 2.257 quadrillion won (US$2.039 trillion), up 1.1 percent from last year. The sales increase rate rose sharply to 16.3 percent in 2010 from 0.6 percent in 2009, but it dropped by 12.2 percent in 2011, by 6.0 percent in 2012, and sharply down by 1.1 percent last year.

The investigated companies are those with more than 50 regular employees and capital of at least 300 million won (US$271,065) among 460,000 domestic companies. A total of 12,232 companies were investigated.

Total employees increased by 89,000 from 4.22 million last year. While the percentage of regular employees decreased by 0.3 percent from last year with 88.1 percent (3.72 million people), temporary and other employees increased by 0.3 percent, recording 11.9 percent (504,000 people).

The number of companies (except financial and insurance companies) that are conducting R&D activities are 5,998, which decreased by 0.5 percent compared to last year, and expenses for R&D increased to 42.7 trillion won (US$38.6 billion), up 12.9 percent from last year. Among those, the expenses for the manufacturing industry increased by 12.6 percent from last year, recording 37.3 trillion won (US$33.7 billion). The average sales of companies that continuously invested in research and development recorded 531.7 billion won (US$479 million) per company for the last 8 years, which was 2.8 times the average.