First-quarter, Return of Domestic Manufactures Marked the Record High.

The first-quarter(Jan-Mar) current rate of return of domestic manufactures marked the record high.

According to the “ Analysis Report on Corporate Management ” released by the Bank of Korea on 1,084 domestic companies including manufacturing, construction, retailing and telecommunication businesses, the first-quarter current rate of return of the manufactures is 8.0%, the highly increased figure compared to that over the same period last year.

This means that the manufactures could get a 80 won of profit per every 1000-won product. The 8% rate of return is the highest after 7.5% in 1973 since the BOK began the survey 60 years ago. The BOK analyzed that the increase in rate of return is the consequence of the decrease in the financial cost due to the interest rate cut and the decrease in the material cost due to the drop in the raw material cost in the world market. 8 out of 10 manufactures earned profit.

The debt-ratio has decreased to 174.4% because manufactures repaid their corporate debt instead of issuing stocks . This figure is only a half of that in 1997, right before the foreign exchange crisis.

Times interest earned, which indicates corporate ability to pay financial cost based on their sales revenue, has increased to 245.5%, 53.6% higher from a year earlier.

Sang-Chul Kim sckim007@donga.com