Korean firms-2023 earnings
Corporate sales, profitability drop in 2023 amid higher costs, economic slump
SEOUL, Oct. 23 (Yonhap) -- South Korean companies' sales declined and their profitability narrowed last year, central bank data showed Wednesday, as higher borrowing costs and increased prices of raw materials ate into their bottom lines amid an economic slump.
Corporate sales dropped 1.5 percent last year from a year earlier, a turnaround from the previous year's 15.1 percent gain.
The data is based on a review of some 935,000 companies that are subject to external audits.
With a sink in their sales, the firms' profitability also narrowed.
Their operating profit-to-sales ratio stood at 3.5 percent last year, compared with a 4.5 percent advance the previous quarter.
The drop in sales and narrowed profitability came amid higher borrowing costs and increased prices of raw materials, such as oil, and an economic slowdown.
The firms' average debt-to-equity ratio came to 120.8 percent last year, down from 122.3 percent a year ago.
Earlier this month, the Bank of Korea cut its key interest rate by a quarter percentage point to 3.25 percent, ending its yearslong restrictive policy amid moderating inflation and faltering domestic demand.
The central bank has been implementing a restrictive mode as it delivered seven consecutive hikes in borrowing costs from April 2022 to January 2023 to tame soaring inflation in Asia's fourth-largest economy.
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