Manufacturers` Profitability Worsened Last Year

Last year, one fourth of the manufacturing companies were not able to cover their interests with operating incomes. And the operating incomes in one of sixth companies were less than the interests that they should have paid for the last two consecutive years.

For manufacturing companies, the gross profit yielded 1.3 percent, -1.97 of net profit, showing the decline of profitability. Leverage dropped to 210.5 percent, the lowest figure for last 32 years, but `Current ratio` demonstrating liquidity fell to 83.2 percent. Such figures were revealed in the analysis of `2,000 Company Management,` on 3,294 companies including 2172 manufacturing companies, conducted by the Bank of Korea (BOK).

Last year, the ratio of operating profit over financial cost rose to 157.2 percent, 61.1 percent higher than that of 1999. However such figure is less than fifty percent of U.S (354.0 percent), and Japan (367.5 percent).

The number of companies that showed the ratio of operating profit over financial cost below 100 percent and thus yielding a negative profit, was 572 or 26.3 percent of analyzed companies. 16.7 percent of them recorded below 100 percent for two consecutive years, and the their long term debt was 82 trillion won, 35.6 percent of total manufacturing sector long term debt.

The ratio of gross profit of manufacturing sector was 1.3 percent, dropped by 0.4 percent over last year (1.7 percent). Without the presence of Samsung Electronics, the figure is worsened from 0.8 percent gross profit to –0.2 percent. And the ratio of net profit was -1.97 percent.

Director of Bureau of Economic Statistics of KOB, Jung Jung-Ho explained that ``Last year, manufacturing companies` loss from the difference of money exchange rate was 3 trillion 500 billion won, a loss from equity evaluation was 10 trillion 499 billion won, and a loss from stock investment was 1 trillion 400 billion won. Hence theoverall net profit recorded a deficit.``

hcs@donga.com