SEOUL, Apr. 23 (Korea Bizwire) — South Korean companies’ revenues declined at a record annual pace in 2014 as the firmer local currency and weak oil prices worked to lower export prices and reduce overseas sales, central bank data showed Thursday.
Combined sales at 1,536 listed firms and 195 non-listed key companies sank 1.5 percent on-year in 2014, the fastest pace since the Bank of Korea (BOK) began compiling the data in 2003.
The figure, which covers most of the country’s large corporations and 45 percent of all companies, has contracted twice in the past: 0.4 percent in 2003 and 0.1 percent in 2009.
The central bank attributed the sluggish results to a decrease in export prices, which tumbled 6 percent on a won-denominated basis last year on a strengthening won and sliding global oil prices.
“Some of the sectors that saw the biggest falls were the IT industry, which suffered a fall in handset shipments. Weak oil prices also affected sales at oil and chemical companies,” said Park Seong-bin, who heads the central bank’s Corporate Statistics team.
Sales in the electronics sector contracted 7.3 percent, a turnaround from a 7.2 percent rise in 2013 and 13.2 percent increase in 2012.
The chemical and oil industry saw its sales decline 3 percent, quickening from a 1.3 percent drop a year earlier, according to the data.
The operating profit to sales ratio, which measures a company’s profitability, also took a blow from sluggish sales. The figure stood at 4.3 percent last year, the lowest since 2003 when relevant data began to be compiled.
The data, however, signaled an improvement in their financial status, with the debt ratio slipping to 91.9 percent from 95.5 percent. It marks the lowest level since 85.3 percent in 2007.
The annual data comes amid bleak growth prospects for Asia’s fourth-biggest economy. Earlier this month, the BOK cut its growth estimate for the year to 3.1 percent from 3.4 percent.
Separate data released earlier in the day showed that the country’s gross domestic product (GDP) gained 0.8 percent from three months earlier in the January-March period, hovering below the 1 percent level for a fourth consecutive quarter.