Seoul: South Korean companies' sales and profitability improved last year, driven by strong performance in the semiconductor, transportation, and other industries, as well as a low base effect, central bank data showed Wednesday. Corporate sales increased 4.2 percent from a year earlier in 2024, reversing a 2 percent on-year decline in the previous year, according to the data from the Bank of Korea (BOK).
According to Yonhap News Agency, the data is based on a review of 34,167 non-financial firms subject to external audits. By sector, manufacturing businesses saw their sales grow by 5.2 percent in 2024, marking a turnaround from a 2.7 percent contraction in 2023, led by gains in electronics, visuals, and communication equipment. Sales in the non-manufacturing sector grew 3 percent last year, also rebounding from a 1.2 percent decline the previous year, driven by service industries, such as transportation, warehousing, and wholesale, and retail.
The local firms' combined operating profits rose 5.4 percent, accelerating from the 3.8 percent growth in 2023. The firms' average debt-to-equity ratio stood at 101.9 percent last year, down slightly from 102 percent the previous year. The data also showed that the proportion of firms with an interest coverage ratio of less than 100 percent stood at 40.9 percent in 2024, up 1.9 percentage points from a year earlier. The figure marked the highest level since the BOK began compiling relevant data in 2013.
The interest coverage ratio is calculated by dividing operating profit by interest expenses. The share of companies that posted operating losses, resulting in an interest coverage ratio below 0 percent, also rose, from 27 percent in 2023 to 28.3 percent in 2024, also a record high since 2013. The overall interest coverage ratio for all companies, meanwhile, climbed to 298.9 percent in 2024, up from 221.1 percent in 2023, according to the data.