Six Public Companies` Profit Plunges

Some public companies financed by the government recorded disappointing annual results last year.

According to the "Financial Performance Report of Public Companies Financed by the Government," submitted by the Ministry of Finance and Economy to the Board of Audit and Inspection on May 23. The profit of six out of 13 public companies decreased by 31.7 percent on average in 2004, compared to that in 2003.

Those companies are: Korea Water Resources Corporation, Korea Highway Corporation, Korea Trade Investment Promotion Agency, Korea Resources Corporation, Korea Agricultural & Rural Infrastructure Corporation, and Korea National Tourism Organization.

The main reasons for the decreased profit, the companies explained, are increased cost, decreased earnings, lower interest rate, and increased bonus. Korea Water Resources Organization saw its cost of sales increased by 11.1 percent from 1.088 trillion in 2003 to 1.2086 trillion won in 2004 as profit fell due to the ongoing land sales business in the Sihwa district in Ansan, Gyeonggi Province.

Korea Highway Corporation`s earnings in the highway rest area business fell by 1.3 billion won to 87.4 billion won in 2004, and the cost of constructing new rest areas also contributed to the outcome.

Korea Trade Investment Promotion Agency`s profit fell by 70.1 percent as the amount of accumulated annual bonus for its employees increased from 350 percent of monthly income in 2003 to 500 percent in 2004. KOTRA explained that the raise in annual bonus in 2004 was due to the excellent results of business evaluation among public companies.

Korea Resources Corporation`s profit fell as the interest rate of loan for mining companies fell by 1.25 percent.

Korea Electric Power Corporation, Korea National Oil Corporation, and Korea Minting and Security Printing Corporation recorded increased profits as the decreased dollar-won ratio led to increased foreign exchanges-converted profit.

legman@donga.com