ID :
19187
Fri, 09/12/2008 - 13:29
Auther :
Shortlink :
https://oananews.org//node/19187
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Korean firms see Q2 profitability dip, suffer sluggish cash flows
SEOUL, Sept. 12 (Yonhap) -- South Korean companies' profitability deteriorated slightly in the second quarter as a weaker won led to foreign exchange losses, overshadowing their increased earnings, the central bank said Friday.
The ratio of local companies' pre-tax net income to sales, a key barometer of
profitability, reached 6.7 percent in the April-June period, down 0.2 percentage
point from three months earlier, the Bank of Korea (BOK) said in a report based
on a survey of 1,578 companies.
The BOK said their profitability deteriorated in the second quarter as despite a
rise in operating profit, the won's weakness resulted in a foreign exchange loss,
causing them to post a non-operating deficit. The won shed 5.3 percent against
the greenback during the same period.
But the ratio of local companies' operating profit to sales, another key
barometer of profitability, came in at 7.6 percent, up from 7.4 percent from the
previous quarter, on the back of brisk sales and a rise in product prices.
"In the case of manufacturers, their profitability was good because sales
increased as they pushed up product prices, reflecting rising raw material costs
and exports remained robust," a BOK official said.
But cash flows of Korean companies, led by builders, were not smooth amid a
slowing economy. South Korean construction companies posted a net outflow of cash
worth 46.2 billion won (US$41.7 million) in the first half, up from a net outflow
of 27.5 billion won the previous year.
"Local builders suffered sluggish cash flows, affected by slumping housing
and real estate markets," the official said.
Meanwhile, the ratio of debt to equity grew at a faster pace in the second
quarter from three months earlier. The ratio reached 96.4 percent at the end of
June, up from 93.5 percent the previous quarter. But the central bank said the
ratio still stays below 100 percent, signalling that their financial health
remained quite sound.
The data comes as the South Korean economy grew 0.8 percent in the second
quarter, as earlier estimated, but domestic demand in the April-June period was
more sluggish than an estimate made in July. On Thursday, the BOK froze its key
interest rate for September at 5.25 percent following a rate hike in the previous
month amid conflicting risks of persisting inflation and slowing economic growth.
Last year, the South Korean economy grew 5 percent. For the year, the economy is
expected to expand in the mid-4-percent range.
The ratio of local companies' pre-tax net income to sales, a key barometer of
profitability, reached 6.7 percent in the April-June period, down 0.2 percentage
point from three months earlier, the Bank of Korea (BOK) said in a report based
on a survey of 1,578 companies.
The BOK said their profitability deteriorated in the second quarter as despite a
rise in operating profit, the won's weakness resulted in a foreign exchange loss,
causing them to post a non-operating deficit. The won shed 5.3 percent against
the greenback during the same period.
But the ratio of local companies' operating profit to sales, another key
barometer of profitability, came in at 7.6 percent, up from 7.4 percent from the
previous quarter, on the back of brisk sales and a rise in product prices.
"In the case of manufacturers, their profitability was good because sales
increased as they pushed up product prices, reflecting rising raw material costs
and exports remained robust," a BOK official said.
But cash flows of Korean companies, led by builders, were not smooth amid a
slowing economy. South Korean construction companies posted a net outflow of cash
worth 46.2 billion won (US$41.7 million) in the first half, up from a net outflow
of 27.5 billion won the previous year.
"Local builders suffered sluggish cash flows, affected by slumping housing
and real estate markets," the official said.
Meanwhile, the ratio of debt to equity grew at a faster pace in the second
quarter from three months earlier. The ratio reached 96.4 percent at the end of
June, up from 93.5 percent the previous quarter. But the central bank said the
ratio still stays below 100 percent, signalling that their financial health
remained quite sound.
The data comes as the South Korean economy grew 0.8 percent in the second
quarter, as earlier estimated, but domestic demand in the April-June period was
more sluggish than an estimate made in July. On Thursday, the BOK froze its key
interest rate for September at 5.25 percent following a rate hike in the previous
month amid conflicting risks of persisting inflation and slowing economic growth.
Last year, the South Korean economy grew 5 percent. For the year, the economy is
expected to expand in the mid-4-percent range.
