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Revenues by South Korean companies continued to dwindle in the third quarter partly due to weak exports, but the rate of the decline slowed while the firms' overall financial stability improved on better profitability, central bank data showed Thursday.
In the three months ended Sept. 30, sales of South Korean firms slipped 1.6 percent from the same period last year, decelerating from a 4.3 percent on-year drop in the previous quarter, according to the Bank of Korea.
Sales of large companies dipped 3.4 percent on-year, also slowing from a 5.7 percent drop in the previous quarter, while those of smaller firms gained 6.5 percent, quickening from a 2 percent increase in the second quarter.
The figures are based on a survey of 3,065 businesses out of the total 16,281 local firms that each have more than 12 billion won (US$10.2 million) in assets and are subject to an external audit.
The cut in sales could be partly attributed to weak exports.
In the July-September period, sales of manufacturing companies shrank 2.1 percent from a year earlier, while sales of those in the service sector that are generally more focused on the domestic market only slipped 0.8 percent on-year, according to the quarterly data.
South Korea's exports have dipped every single month since the start of the year, plunging 15.8 percent on-year in October, the sharpest drop in over six years since August 2009.
Despite the cut in sales, the local firms' profitability continued to improve in the third quarter.
Their profitability, measured as the ratio of their operating income to sales, came to 5.6 percent in the July-September period, up from 4.5 percent in the same period last year, while their pre-tax net income ratio reached 7.9 percent, quickening from 4 percent a year earlier and 4.8 percent in the previous quarter.
Improved profitability has apparently helped make local firms more financially stable, the data showed.
As of the end-September, the local companies' total assets expanded 1.8 percent on-year, quickening from a 1.4 percent gain in the previous quarter, while their debt-to-equity ratio lost 0.9 percentage point over the cited period to 102 percent. (Yonhap)
