25% of KOSPI-listed Companies Suffering From Deficits

A fourth of companies listed on the Korean stock exchange recorded a deficit in the first three quarters of the year. In addition the number of listed companies that were in the black last year but turned to the red this year has grown nearly threefold.

After announcing their plans to restructure the construction sector, the Korean government and banking sector seek to streamline small- and medium-size shipbuilders suffering from oversupply and sluggish demand.

The Korea Exchange and the Korea Listed Companies Association analyzed the performances of 570 listed companies settling their accounts in December. The companies’ sales rose 25.3 percent and operating profit gained 15.23 percent from a year ago.

Net profit, however, decreased 19.57 percent over the same period.

The number of listed companies recording a deficit surged, with 26.14 percent or 149 companies doing so in the first three quarters, up from 17.13 percent a year ago.

The performances of KOSPI-listed companies have drastically worsened since the third quarter, when the real economy began a significant decline.

In the third quarter, the number of companies with deficits was 205, up 1.7 times from 121 in the second. Given that the economic slowdown is expected to worsen, more companies are expected to see deficits in the fourth quarter.

Operating and net profits plunged in the third quarter after corporate performance reflected falling revenue resulting from the global economic slowdown, and weakening won.

On the tech-heavy KOSDAQ market, 902 listed companies settling their accounts next month recorded a net loss of 651.1 billion won (449.6 million U.S. dollars) in the third quarter, after earning a net profit of 628.9 billion won (676.2 million dollars) in the same quarter last year.

jefflee@donga.com jaeyuna@donga.com