Negative Outlook for 'Sales and Production Volume' in Changwon Area Manufacturing Companies in Q1 Next Year

Changwon Chamber of Commerce and Industry Announces Changwon Regional Business Survey (BSI)

Changwon Chamber of Commerce and Industry, Gyeongnam.

[Asia Economy Yeongnam Reporting Headquarters, Reporter Song Jong-gu] Manufacturing companies in the Changwon area of Gyeongnam have issued negative forecasts regarding sales and production volume for the first quarter of next year.

The Changwon Chamber of Commerce and Industry announced on the 28th the results of the "2023 1st Quarter Changwon Regional Business Outlook Survey," conducted from the 5th to the 16th of this month targeting manufacturing companies in the Changwon area.

According to the survey results from 154 companies, the Business Sentiment Index (BSI) recorded '71.4,' falling below the baseline (100) for three consecutive quarters. By survey item, sales (82.5), operating profit (72.1), facility investment (81.2), supply chain stability (82.5), and factory operation (89.6) all fell below the baseline across all sectors.

The main factors worsening profitability, including rising production costs such as raw material prices and labor costs, as well as the three major adversities (high interest rates, high exchange rates, and high inflation) that have intensified since the second quarter, continue. Concerns are growing that the decline in domestic and international demand due to the global economic downturn will lead to decreases in sales and production volume, which have supported corporate activities, resulting in a negative outlook for the perceived economy in the first quarter of next year.

By industry, all sectors showed negative forecasts: machinery equipment (80.0), transportation equipment (76.9), electrical and electronics (57.9), steel and metals (53.8), and other manufacturing (53.8). Particularly, negative outlooks were prominent in the electrical and electronics and steel and metals manufacturing sectors. For electrical and electronics manufacturing, the main factors were the deterioration of domestic and international consumer sentiment combined with seasonal factors. For steel and metals manufacturing, as an industry supplying raw materials and basic capital goods, it is interpreted that the sector quickly feels the impact of demand decreases across all industries.

When asked about achieving the sales targets set at the beginning of the year, 57.1% of respondents answered that they "fell short of the target." Those who responded that they "achieved the annual target" accounted for 24.7%, and those who "exceeded the target" accounted for 18.1%.

Regarding operating profit, 66.2% answered that they "fell short of the target." Those who "achieved the annual target" accounted for 18.2%, and those who "exceeded the target" accounted for 15.6%.

More than half of the respondents failed to meet the initial targets for both sales and operating profit, with the proportion falling short of the operating profit target relatively higher than that for sales.

When asked about factors affecting management performance such as sales and operating profit, 42.9% of respondents cited "raw material prices," the highest proportion. This was followed by "domestic market conditions" at 25.3%, "export market conditions" at 15.6%, "high interest rate situation" at 9.1%, and "high exchange rate situation" at 5.8%.

A representative from the Changwon Chamber of Commerce and Industry said, "In Changwon's industry, which is centered on profitability, the rise in raw material prices directly affects profitability, leading to deteriorated price competitiveness and significantly impacting profitability. Next year, as the number of companies expecting a full-scale domestic and international demand slump increases, the economic outlook for next year is negative."

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