On Tuesday, data from the Bank of Korea revealed that South Korean companies’ sales and profitability had sharply declined in the second quarter of the year, due to higher borrowing costs and increasing prices of raw materials in the face of an economic slump.
The figures, which were based on an examination of 22,962 companies that require external audits, showed a 4.3 percent decrease in sales compared to the same period the year before, a stark contrast to the 0.4 percent growth seen in the first quarter.
The decline in sales and profitability was a result of the higher borrowing costs, increased prices of raw materials, such as oil, and the slowing of the economy.
The firms’ operating profit-to-sales ratio dropped to 3.6 percent, a considerable decrease from the 7.1 percent seen in the previous quarter.
The companies’ average debt-to-equity ratio was also lower, standing at 90.8 percent at the end of June, down from 95 percent three months prior.
sam@yna.co.kr
(END)