According to the Bank of Korea (BOK), South Korean companies experienced a decline in sales and profitability in 2022, due to higher borrowing costs and increased prices of raw materials. The BOK’s survey of nearly 910,000 firms that are subject to external audits showed that corporate sales rose 15.1 percent in 2022, a decrease from the 17 percent growth seen in the previous year. The operating profit to sales ratio dropped from 5.6 percent to 4.5 percent, and the net profit to sales ratio dropped from 6.5 percent to 4.6 percent.
The slowdown in sales and profitability was attributed to higher borrowing costs and the increased prices of raw materials, such as oil, which the central bank had increased seven times since April 2021. Manufacturing businesses saw their sales growth slow to 14.6 percent from 18.1 percent, while sales in the nonmanufacturing sector grew 15.4 percent, a decrease from the previous year’s 16.2 percent. The firms’ average debt-to-equity ratio was 122.3 percent in 2022, up from 120.3 percent the year before.