SEOUL, Aug. 17 (Korea Bizwire) – The operating profit of automakers and their vendors in South Korea came in at a disappointing level last year with each firm making only about US$0.05 for every $1 in sales, industry data showed Wednesday.
According to the data compiled by a local research institute, combined sales of 1,079 South Korean auto companies, including auto parts makers, came to about 234.8 trillion won ($213.96 billion) in 2015.
Their combined operating profit came to some 12.18 trillion won, less than 5.2 percent of their sales, as well as an operating profit of 13.39 trillion won posted by Samsung Electronics Co. alone in 2015.
The low profitability was largely attributed to high costs.
“The auto industry is one of the sectors that face ever increasing costs of materials and labor,” the institute said. “The situation is far worse for smaller firms in the industry as most of the profit is generated by only a handful of large companies.”
In 2015, only 19 auto firms had more than 1 trillion won in sales while only 59 companies posted a combined sales of 272 trillion won, accounting for 86 percent of the total by all 1,079 firms.
In terms of profit, only the three largest firms — top automakers Hyundai Motor Co., Kia Motors Corp. and their auto parts making affiliate Hyundai Mobis Co. — posted a combined operating profit of over 8.47 trillion won, accounting for nearly 70 percent of the total.
Only 94 auto companies, or 8.7 percent of the total, enjoyed an operating margin of over 10 percent in 2015.
The local firms’ average debt ratio stood at 71.9 percent as of end-2015 as the 1,079 companies here owned 131 trillion won in total assets while owing 94 trillion won in debts.
Of the total, 24.7 percent or 267 companies had a debt ratio of over 200 percent.