SEOUL, Dec. 26 (Korea Bizwire) — South Korean companies saw the lowest on-year sales growth in more than five years in the third quarter of this year as unfavorable currency exchange rates and weakening oil prices hit exporters, central bank data showed Friday, raising concerns over their flagging growth potential.
Sales growth at 1,670 local firms, including 1,519 listed companies, slumped 3.2 percent on-year in the July-September period, falling the most since a 4 percent drop in the second quarter of 2009 when the global financial storm hit the country, according to the data by the Bank of Korea (BOK).
The figure for manufacturers, which accounted for more than half of the surveyed firms, tumbled 5.2 percent, also marking the sharpest fall since a 5.5 percent drop in the second quarter of 2009.
While shipbuilders’ and machinery makers’ sales growth improved in the third quarter from the previous quarter, electronics firms saw their sales growth shrink 13.7 percent, widening from a 9.6 percent fall three months earlier.
Sales growth at chemical firms and oil refiners also shrank 4.9 percent compared with a 0.4 percent dip in the second quarter.
“Overall, exporters saw their won-denominated sales retreat as the won-dollar exchange rate slipped. Additionally, the tech sector suffered a slump in smartphone sales while a fall in global oil prices hit the chemical industry,” said Park Seong-bin, who heads the central bank’s Corporate Statistics team.
The results come in line with an earnings shock at Samsung Electronics, the world’s top smartphone maker and South Korea’s biggest market-cap firm. In the third quarter, the company’s profit nearly halved to a three-year low as it grappled with emerging Chinese startups and its long-time rival, Apple.
The average ratio of operating profit to sales, which measures corporate profitability, also soured from the previous year, slowing to 4.2 percent from 5.1 percent.
BOK’s Park explained that profitability at automakers took a hit from a series of strikes while technology firms and chemical companies suffered from sluggish smartphone sales and weakening oil prices. Shipmakers retreated to the red due to delays in ship construction and low-priced deals, he added.
The quarterly data comes as the government and economic institutions are trimming their 2015 growth outlook for Asia’s fourth-largest economy amid a mix of external and domestic risk factors.
The government recently lowered its annual growth forecast for next year to 3.8 percent from 4 percent, citing weaker-than-expected consumption and business investments.
The central bank is also forecast to revise down its previous projection of 3.9 percent. Its upcoming revision is scheduled for January.
Yonhap
