South Korean companies suffered a heavy loss in their sales and profits in the first quarter, central bank data showed Tuesday, apparently due to a sharp drop in exports and tepid local consumption.
In the first three months of the year, the average sales of local businesses declined 2.4 percent from the same period last year, according to the data from the Bank of Korea. The figure follows a 6 percent on-year growth in their sales during the fourth quarter of last year.
Bank of Korea (Yonhap)
The country's exports dipped 3.2 percent on-quarter in the January-March period, according to earlier data. Outbound shipments are said to account for about half of the country's overall gross domestic product.
South Korea's exports have dropped for six consecutive months since December, and are widely expected to continue dwindling at least over the next few months due to the escalating trade tension between the United States and China, the world's two largest economies that are also the world's two largest importers of South Korean goods.
The gloomy data bode ill for exporters going forward, with their bottom lines likely to be further hurt.
The quarterly report was based on a survey of 3,333 select local companies out of the total 17,200 that are subject to an external audit. Those surveyed included 2,029 manufacturing companies.
Manufacturers' revenues dropped 3.7 percent from a year earlier in the first quarter, while those of non-manufacturing companies slipped 0.7 percent on-year, according to the BOK.
The local companies' profitability also declined, with the manufacturing companies' operating income growth slowing to a 5.7 percent jump from a 9.1 on-year spike in the first quarter of 2018.
That of non-manufacturing firms also slowed to 4.6 percent from 5.4 percent over the cited period.
Their fiscal soundness also deteriorated.
The average debt ratio climbed to 86.7 percent in the January-March period from 82.1 percent in the previous quarter, with the ratio of their total borrowing to assets also growing to 22.8 percent from 21.8 percent over the same period. (Yonhap)