Last Year’s Corporate Revenue and Asset Growth Rates Reach All-Time High... COVID-19 Base Effect

BOK Releases '2021 Corporate Management Analysis' Results
Last Year Sales Up 17%, Total Assets Up 12.7%
Impact of COVID-19 Base Effect and Rising Raw Material Prices

Office workers are hurrying their steps at the Gwanghwamun intersection in Seoul. Photo by Moon Honam munonam@

Last year, due to the rise in international oil prices and other raw material costs as well as the base effect of COVID-19, the performance of the petroleum refining and chemical industries greatly improved, resulting in the highest-ever growth rates in sales and total assets for domestic non-financial profit corporations.

According to the '2021 Corporate Business Analysis' data released by the Bank of Korea on the 19th, sales of domestic non-financial corporations increased by 17% last year, a significant rise compared to the previous year (-1.1%). Due to the rise in international raw material prices, the performance of petroleum refining (-34.1%→49.3%), chemical industry (-8.0%→28.1%), and transportation and warehousing (-8.1%→29.9%) greatly improved within one year.

The total asset growth rate also improved from 7.9% in 2020 to 12.7% last year, with both manufacturing (5.9%→10.4%) and non-manufacturing (9.3%→14.1%) sectors seeing a significant increase in current assets. The Bank of Korea explained, "Based on solid performance, manufacturing saw a large increase in accounts receivable (?0.6%→16.1%), while non-manufacturing experienced an increase in cash equivalents (22.7%→24.7%)."

Both the sales growth rate and total asset growth rate are the highest since the statistics compilation began in 2009.

The operating profit margin on sales rose from 4.2% to 5.6%, supported by changes in external conditions such as increased global demand and expanded price spreads of petroleum products. Profit margins expanded compared to the previous year, centered on electronic, video, and communication equipment (8.4%→12.9%), petroleum refining (-5.9%→5.9%), and transportation and warehousing (0.5%→7.2%). The profit margin on sales is the highest since 2018 (5.6%).

The pre-tax net profit margin on sales increased from 3.9% in 2020 to 6.5%, due to the rise in operating profit margin and the turnaround to a surplus in non-operating income. This is also the highest ever. Non-operating income recorded a surplus for the first time since the statistics compilation in 2009, as dividend income from real estate, wholesale and retail trade investments, and electronic, video, and communication equipment industries greatly increased.

Regarding corporate stability, the debt ratio of manufacturing increased (76.3%→78.6%), while the dependence on borrowings decreased (23.4%→22.6%). This is interpreted as an effect of increased accounts payable due to raw material purchases and increased borrowings for facility investment, mainly in core industries such as electronics and petroleum & chemical.

In non-manufacturing, both the debt ratio (157.3%→158.2%) and borrowing dependence (34.8%→35.0%) increased. The Bank of Korea explained, "This rise was due to increased corporate bond issuance from profitability deterioration in electricity and gas industries and increased borrowings for infrastructure construction investments such as roads."

The interest coverage ratio, which indicates the ability to bear financial costs, rose significantly from 328.92% to 487.90%, as operating profit margin increased and financial cost burden ratio decreased simultaneously. The proportion of companies with an interest coverage ratio below 100%, meaning they cannot cover interest expenses with profits, slightly decreased from 40.9% to 40.5%.

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