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제목 Analysis of Korean Corporate Business Performance in the Second Quarter of 2018


Korean corporations posted a top-line growth of 4.8 percent in the second quarter of 2018 compared to the previous quarter according to a recent report released by the Bank of Korea. The manufacturing industry saw its revenues expand by 4.3 percent quarter on quarter, backed by strong growth of the petrochemical sector. Non-manufacturing revenues grew by 5.5 percent as the construction sector rebounded robustly in the second quarter. Small and mid-sized businesses recorded a revenue growth of 5.7 percent compared to 4.6 percent for large businesses.

Meanwhile, total asset growth slowed to a rate of 1.2 percent in the April - June period of 2018. Manufacturing businesses outperformed non-manufacturing ones in terms of asset growth. Big companies saw their assets increase by 0.7 percent, while the asset growth rate for smaller businesses grow by 3.1 percent.

Revenue and Total Asset Growth of Korean Corporations
(Source: Bank of Korea)

The bottom-line performance of Korean corporations remained fairly good. Their operating margin improved to 7.7 percent in the second quarter compared to the same period a year earlier, and the ratio of net income before taxes to sales stayed the same at 7.7 percent. Manufacturing companies posted an operating margin growth of 9.5 percent while the ratio of net income before taxes to sales was 9.8 percent. On the other hand, those in the non-manufacturing sector recorded a slight decrease in their operating margin to 5 percent.

Profitability of Korean Corporations
(Source: Bank of Korea)

The financial position of Korean businesses remained stable, with their debt to equity ratio improving. As of late June 2018, the overall debt to equity ratio decreased to 82.7 percent from 85.4 percent at the end of the first quarter, while the debt to total assets marginally rose to 22.1 percent over the same period. These two ratios are indicators of financial leverage, showing the percentages of a company's equity and total assets financed by debt. A higher ratio means more leverage and more risk.

Financial Stability of Korean Corporations
(Source: Bank of Korea)

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