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The unexpected outbreak of COVID-19 sharply hurt the top and bottom line as well as financial statement of Korean companies during the first quarter.
According to a study by the Bank of Korea on Tuesday, the operating margin ratio, or income to sales, of non-financial enterprises averaged at 4.1 percent in the January-March period, compared with 5.3 percent in the same period a year ago.
The operating margin of manufacturers dropped from 5.7 percent to 3.5 percent during the cited period while that of non-manufacturing companies rose from 4.6 percent to 5.1 percent.
By sector, petrochemical industry lost most money, with its average margin sinking from 5.6 percent to 1.0 percent in the first quarter from a year ago. The plunge was due to increased losses on valuation of inventory assets due to crashes in oil prices.
Companies in machinery and electrical electronics sector also saw profitability drop from 7.5 percent to 5.7 percent due to falling chip prices.
By business size, the operating margin of big companies fell from 5.1 percent to 3.5 percent in the first quarter from a year ago while that of small- and mid-size companies improved from 6.0 percent to 7.0 percent.
The companies’ income before taxes to sales ratio also worsened from 5.8 percent to 4.8 percent in the first quarter ended March.
The BOK said that companies’ profitability deteriorated after February when COVID-19 spread quickly globally.
Data also showed sales of non-financial companies fell 1.9 percent in the first quarter from a year ago, worsening from a 0.5 percent drop in the previous quarter ended December.
Manufacturing companies’ sales fall narrowed from 2.4 percent to 1.9 percent during the cited period while that of non-manufacturing companies worsened from 2.2 percent gain to 1.9 percent loss.
Among non-manufacturing enterprises, those in wholesale and retail sector attributed largely to an overall sales plunge. In the first quarter ended March, their sales fell 2.7 percent, a drop from a 3.0 percent gain a year ago. Companies in food and accommodation industry also saw sales drop 14.6 percent, a shift from 12.1 percent gain during the same period.
Data showed that total assets of local companies increased 1.5 percent in the first quarter against the previous three months, halved from a 3.2 percent growth in the first quarter of last year.
Companies’ debt ratio reached 88 percent in the January-March period, up from 84.3 percent in the previous quarter ended December.
The ratio rose in all sectors and business sizes – manufacturing companies from 65 percent to 68.9 percent, non-manufacturing companies from 117.5 percent to 120.8 percent, large companies from 79.9 percent to 83.6 percent, and small- and mid-size firms from 106.7 percent to 109.6 percent.
Local companies’ total borrowings and bonds payable to total assets ratio also rose from 25.1 percent to 25.3 percent.
Data is based on a survey of 3,764 non-financial companies that are obliged to be audited by independent external auditors as of end of 2018.
[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]
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