SEOUL, Nov. 19 (Korea Bizwire) — Soaring costs of international raw materials are expected to eat into South Korean exporters’ profitability and lead to rising product prices down the road, a poll showed Friday.
The survey of 100 major exporters, taken by the Korea Economic Research Institute (KERI), showed 83 percent of the respondents saying surging raw materials costs are having a negative impact on them.
Only 12 percent replied they have not been affected, with the remaining 5 percent saying rising raw materials costs having a positive impact.
Nearly 84 percent of the surveyed companies answered a hike in materials costs has caused their operating margin, or the ratio of operating profit to sales, to decline this year from 2020.
Those exporting companies have suffered an average 5.9 percent decrease in operating profit, with machinery makers and shipbuilders being hit hardest with an 8.8 percent drop.
The exporters said purchase prices of raw materials have expanded 18.6 percent on average this year from a year earlier.
Nearly 34 percent of the polled firms said they will tackle rising raw materials costs with an increase in product prices, with 31 percent saying they will ramp up cost-saving efforts.
Slightly over 76 percent of those companies expect the uptrend in raw materials prices to last more than 6 months.
Raw materials costs account for an average 41 percent of those exporters’ costs of goods sold, with petrochemicals manufacturers reporting the highest percentage of 53.3 percent, according to the survey.