Last Year Corporate Sales Growth Rate 17.7% 'All-Time High'... Demand and Exports Up

[Asia Economy Reporter Seo So-jeong] Last year, the sales growth rate of corporate enterprises reached 17.7%, marking the highest record since the system was established in 2013, driven by demand recovery and strong exports.

According to the Bank of Korea on the 8th, a survey of 26,880 non-financial profit-making corporations subject to the "Act on External Audit of Stock Companies, etc." showed that their sales growth rate turned positive from -3.2% in 2020 to 17.7% last year. The total asset growth rate also reached an all-time high of 10.8%.

Kim Dae-jin, head of the Corporate Statistics Team at the Bank of Korea's Economic Statistics Bureau, explained, "Both manufacturing (19.7%) and non-manufacturing (15.3%) sectors saw significant increases. In manufacturing, electronic, video, and communication equipment (20.8%), chemical substances and products (32%), and primary metals (36.5%) showed strong growth, while in non-manufacturing, transportation and warehousing (35.5%) and wholesale and retail trade (16.5%) increased substantially."

Profitability also improved significantly. Last year, with rising product prices, the operating profit margin on sales recorded 6.8%. The pre-tax net profit margin on sales also hit a record high of 7.7%. Manufacturing (7.7%) saw increases centered on electrical, video, and communication equipment (13.9%), chemical substances and products (9.4%), and primary metals (9.4%), while non-manufacturing (5.7%) rose mainly in transportation and warehousing (13.2%).

Accordingly, the interest coverage ratio reached an all-time high of 680% last year, up from 422.7% in 2020, and the proportion of companies with a ratio below 100% decreased from 33.0% in 2020 to 31.2% last year.

The debt ratio, an indicator of stability, slightly increased to 97.7% from 97.3% the previous year due to rising raw material prices and a weaker Korean won, which led to increased accounts payable. However, the dependence on borrowings decreased to 26.5% from 27.7% the previous year due to asset growth from favorable business conditions.

Additionally, with increased cash inflows from operating activities, the cash flow coverage ratio rose to 62.3% from 57.2% the previous year.

Team leader Kim said, "With demand recovery and strong exports last year, the growth and profitability of corporate enterprises improved significantly compared to the previous year. Since the sales growth rate was only -3.2% in 2020 due to the COVID-19 situation, a base effect from that is also likely to have played a part."

This content was produced with the assistance of AI translation services.