Listed companies suffer growth setbacks in 2013: report

By 신용배
  • Published : Feb 13, 2014 - 09:11
  • Updated : Feb 13, 2014 - 09:35

South Korea's leading listed companies suffered bigger growth setbacks in 2013 compared to the post-global crisis year of 2009, a report compiled by conglomerates' lobbying group said Thursday.

The report by the Federation of Korean Industries (FKI) said sales growth numbers for the 148 large listed companies were poorer than those for the 1,536 non-financial sector businesses traded on the country's main and secondary stock exchanges.

Large companies refer to businesses with annual sales exceeding 1 trillion won ($937 million).

The lobby group said key indicators such as net sales growth rates contracted 0.48 percent in the first three quarters of last year for large companies, which contribute the most to the national economy, compared to minus 0.10 percent for all listed firms.

The findings said compared to 2009, when sales growth reached 1.33 percent for all listed companies, last year's conditions were bleaker.

"Of the 10 key corporate markers used to gauge the health, stability and growth potential of companies, six deteriorated in the first nine months of last year vis-a-vis 2009, when the country was trying to regain its balance in the wake of the global financial crisis," the FKI said.

In addition, total asset growth rates (TAGR) and growth for property, plants and equipment all deteriorated.

Last year's TAGR stood at 3.04 percent from 7.81 percent in 2009, with property and plant growth falling to 2.42 percent from 8.04 percent.

For profitability markers, the FKI said the ratio of operating income to sales and pre-tax profit margins all posted lower numbers of 5.62 percent and 4.84 percent, respectively, from 6.18 percent and 6.31 percent tallied in the past.

It said while the interest coverage ratio did improve somewhat, 37.6 percent of companies checked were having a hard time paying interest on loans they have taken out with their operating profit.

On the stability factor, the FKI said reliance on borrowing was the only downer, deteriorating from 24.81 percent in 2009 to 26.36 percent. Other indicators such as capital adequacy ratio and debt to equity ratio improved marginally.

Commenting on the data, Hong Sung-il, head of the FKI's financial and tax team, said that while the country's economic growth accelerated in 2013, sluggish sales undermined the growth potential and profitability of the business sector.

"This year's conditions may not represent any serious improvement, with domestic demand likely to remain weak and uncertainties mounting among emerging markets," he said.

He stressed that there is a need to find new growth engines to overcome future challenges, with measures taken to drastically alter the business environment for the better. The FKI, with its 554 members, has been calling on the government to lift restrictions that can help the overall business environment. (Yonhap)