Due to the slowdown in manufacturing industry hit by global oil price slump, the total revenue of the across-the-board South Korean companies in 2015 gained by only 0.3 percent on year, hitting the record-low level since the central bank started to compile the relative data 14 years ago, the Bank of Korea data showed.

According to the 2015 corporate management analysis report released by the Bank of Korea on Sunday, Korean companies’ profitability and sustainability improved last year compared to a year ago period but one-third of the firms with debt were struggling severely that they did not earn enough to make interest payments on loans. The central bank compiled the 2015 management results of 574,851 private firms – 130,748 manufacturers and 444,103 non-manufacturers- excluding financial institutions of the country.

The overall revenue earned in 2015 grew by record-low 0.3 percent on year since the central bank started to compile relative data in 2002. The sales of the manufacturing sector dropped 3.0 percent from a year ago, and the sales growth contracted for two straight years after it declined by 1.6 percent in 2014 when the sales growth rate fell below zero for the first time since the bank began collecting the statistics data in 1961.

The revenue growth rate of the large-sized manufacturers recorded negative 4.7 percent last year, worsening from negative 0.4 percent in 2014 while the revenue growth rate of small- and medium-sized manufacturers climbed to 8.0 percent from 4.4. percent during the same period. By sector, the total revenue for petroleum and chemical companies plunged by 15.2 percent on year while that of metal products makers shrank by 6.8 percent last year.

The operating profit margin, however, improved in general, inching up to 4.7 percent last year from 4.0 percent in 2014. It is the best record in five years since the rate hit 5.3 percent in 2010. Such improvement was attributed to the fall in global oil price that was translated as a smaller cost of sales for corporates. The portion of the cost of sales within total revenue shrank to 78.3 percent last year from 80.3 percent in 2014.

The interest coverage ratio of the Korean companies last year reached 353.3 percent, jumping by 68.8 percentage point from 284.5 percent in 2014. The interest coverage ratio refers to a company’s ability to pay interest on outstanding debt with its operating profit.

But many firms were still unable to pay interest on debt with income. The portion of companies with interest coverage ratio below 100 percent remained at 31.5 percent, slightly improving from 32.1 percent in 2014.

The sustainability of corporates overall had recovered last year. The debt ratio of the total companies fell to 128.5 percent from 134.5 percent in 2014 and the debt-to-asset ratio narrowed to 31.5 percent from 32.2 percent during the same period. The debt ratio of the shipbuilders that have undergone massive restructuring programs deteriorated to 355.8 percent from 251.5 percent during the same period.

By Boo Jang-won

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]