Seoul: South Korean companies' overall growth momentum weakened in the first quarter, though their profitability and financial stability saw slight improvements, central bank data showed Monday. Combined sales of 23,137 companies subject to an external audit rose 2.4 percent on-year in the January-March period, slowing from a 3.5 percent increase in the previous quarter, according to data from the Bank of Korea (BOK).
According to Yonhap News Agency, companies in the manufacturing sector reported 2.8 percent sales growth in the first quarter, down from a 3.8 percent increase a year earlier, while sales growth in the non-manufacturing sector decelerated to 1.9 percent from 3.1 percent over the same period. "The slowdown was attributable to weakening export growth centered on memory chips and intensified competition from low-cost Chinese products," a BOK official said. "In the non-manufacturing sector, falling maritime freight rates and a decline in domestic housing construction led to slower sales growth in the transportation and construction industries," he added.
Profitability indicators, however, improved across the board. The average operating profit margin of all surveyed companies rose to 6 percent, up 0.6 percentage point from the same period last year. Both the manufacturing and non-manufacturing sectors reported gains in operating profit margins, supported by a greater share of sales from high value-added semiconductors and liquefied natural gas (LNG) carriers, as well as strong performance by game companies, the BOK said. Profitability also improved across all company sizes. Large firms saw their operating profit margin rise from 5.7 percent to 6.4 percent, while small and medium-sized enterprises (SMEs) recorded an increase from 3.8 percent to 4.1 percent, according to the data.
Financial stability indicators also showed improvement. The debt-to-equity ratio of the surveyed companies stood at 89.9 percent in the first quarter, down from 91.2 percent in the fourth quarter of 2024. Their reliance on borrowing edged down to 25 percent in the cited period from the previous quarter's 25.1 percent. "The effects of the United States' new tariff policies are still ongoing, and it is difficult to determine how they specifically impacted corporate performance in the first quarter," the BOK official said. "We will need to continue monitoring the situation."