Listed Companies Post Record High Net Earnings of 49.5 Trillion Won

As of December 2004, the number of listed companies in Korea grew substantially, posting record high revenues and net earnings. The financial soundness of listed manufacturing companies improved, with their overall debt ratio standing at 91.26 percent. It was the first time that the ratio has dropped below 100 percent.

However, the gap between large corporations and SMEs widened.

According to the Korea Exchange on April 3, as of December 2004, the net earnings of 531 listed companies were 49.52 trillion won.

The amount is 101.22 percent higher from 24.61 trillion won in 2003 and almost twice as much as the 26.96 trillion won in 2002.

Their revenues increased by 17.05 percent to 608.41 trillion won from 519.79 trillion won in 2003. Their operating income was 58.89 trillion won, 45.07 percent higher from 40.41 trillion won in 2003.

Despite stagnant domestic consumption, listed companies saw a substantive increase in their revenues and net earnings, largely because of strong exports.

Meanwhile, the manufacturing sector witnessed its net earnings grow 55.99 percent to 46.99 trillion won from 30.12 trillion won in 2003. Its operating income stood at 54.83 trillion won, 30.79 percent higher than the previous year.

The operating margin of the manufacturing sector rose by 1.01 percent to 9.69 percent. In other words, the companies gained 969 won from every 10,000 in sales.

The financial sector displayed enhanced profitability thanks to the reduced number of ailing companies. Moreover, industries that are closely related to exports, such as the transportation/warehousing, electronics, steel/metal, and chemical industries, witnessed significant increases in their revenues and net earnings.

In contrast, industries that rely on domestic consumption, such as food and beverage industries and distribution, saw a decrease in their net earnings by 11.57 percent and 38.87 percent, respectively, which highlighted the bipolarization between exports and domestic consumption.

Kwang-Hyun Kim Wan-Bae Lee kkh@donga.com roryrery@donga.com