Due to Strong Semiconductor Exports...Improved Profitability of Our Companies in Q3

Export containers are piled up at Busan Port. Photo by Jinhyung Kang aymsdream@

As the export boom of high-spec semiconductors continues, the profitability of Korean companies improved in the third quarter. However, growth slowed due to the sluggish demand recovery for general-purpose semiconductors and the poor performance of the petrochemical sector.

According to the "2024 Q3 Corporate Management Analysis Results" released by the Bank of Korea on the 17th, the operating profit margin to sales of Korean externally audited companies (3,940 sample surveys) in the third quarter was 5.8%, up from 4.0% recorded in the same period last year. The operating profit margin to sales, which represents the ratio of operating profit to sales, is a representative indicator of corporate profitability.

By industry, the manufacturing sector's operating profit margin to sales was 6.1%, showing improvement from 4.0% in the same period last year due to increased demand and price rises for high-spec semiconductors related to artificial intelligence (AI). The transportation equipment sector also recorded 6.6%, driven by exchange rate increases and a rise in orders for high value-added ships.

In the non-manufacturing sector, indicators for the transportation industry improved based on rising maritime freight rates and reduced aviation fuel costs due to falling oil prices. By company size, both large enterprises (4.1%→6.0%) and small and medium enterprises (3.9%→4.8%) showed increases.

On the other hand, the sales growth rate, an indicator of growth, fell to 4.3% in the third quarter from 5.3% in the previous quarter. During the same period, manufacturing declined from 7.3% to 4.9%. Despite increased demand for AI-related semiconductors and rising export prices, the growth slowed due to sluggish demand recovery for general-purpose semiconductors such as PCs and smartphones. The petrochemical sector also worsened due to falling product prices and continued oversupply.

The debt ratio, a stability indicator, also slightly decreased to 87.8% in the third quarter from 88.9% in the previous quarter. By industry, both manufacturing (67.1%→66.0%) and non-manufacturing (131.9%→130.9%) declined, and by company size, both large enterprises (84.7%→84.0%) and small and medium enterprises (112.0%→108.3%) decreased.

The dependence on borrowings rose to 25.4% compared to 25.2% in the previous quarter. Manufacturing (20.5%) maintained the previous quarter's level, while non-manufacturing (32.0%→32.4%) increased. By company size, large enterprises (23.8%→24.2%) increased, but small and medium enterprises (32.1%→31.1%) decreased.

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