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S. Korean firms' profitability weakens in Q3: BOK

12-20-2011 13:55 BJT

SEOUL, Dec. 20 (Xinhua) -- South Korean firms' profitability weakened in the third quarter due to an increase in production costs caused by a rise in global raw material prices, the central bank said Tuesday.

Average ratio of operating profit at 1,420 firms listed on the local bourse and 102 major unlisted companies reached 5.3 percent of their sales during the July-September period, down from 5.5 percent tallied in the second quarter, according to the Bank of Korea (BOK).

That reading means companies earned an average of 5.3 won in operating profit per every 100 won in sales during the quarter. Operating profit refers to sales minus cost of goods sold and sales & administrative expenses.

The ratio of operating profit against interest payment, which measures companies' ability to pay back borrowing costs, dropped to 400.1 percent in the third quarter from 432 percent the previous quarter due to weaker profitability, according to the BOK.

The local firms' sales grew 12.1 percent in the three months ended Sept. 30 from a year earlier, down from a 13.1 percent on- year expansion tallied in the second quarter. The on-quarter growth rate of total assets accelerated to 2.5 percent on average during the third quarter from 0.9 percent the previous quarter, but the rate of tangible assets fell from 2 percent to 1.8 percent over the cited period.

Meanwhile, local firms' ratio of debts to equity capital stood at 102.1 percent as of the end of September, up from 97.4 percent three months earlier.


Editor:Zhang Pengfei |Source: Xinhua

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