Sales Increase in Both Manufacturing and Non-Manufacturing
Debt Ratio and Borrowing Dependence Decrease Due to Strong Exports
[Asia Economy Reporter Jang Sehee] As sales in both manufacturing and non-manufacturing sectors increased, the domestic corporate sales growth rate in the second quarter recorded an all-time high. This is attributed to strong exports and a recovery in domestic demand.
According to the '2021 Q2 Corporate Business Analysis' released by the Bank of Korea on the 15th, the sales growth rate in the second quarter for 20,120 externally audited corporations (10,315 manufacturing and 9,805 non-manufacturing) was 18.7%. This is the highest increase since the statistics began in Q1 2015. It is 4.9 percentage points higher than the previous record of 13.8% in Q3 2017.
The Bank of Korea analyzed, "Exports of key industries such as steel and petrochemicals continued to perform well, and sales in the non-manufacturing sector are also improving. Although the fourth wave of social distancing cannot be ruled out as a factor, its impact appears to have diminished compared to before."
By industry, both manufacturing and non-manufacturing sectors saw an expanded growth rate. Manufacturing sales growth increased from 10.4% in Q1 to 24.3% in Q2, while non-manufacturing rose from 3.3% to 12.4%.
Within manufacturing, metal products (40.3%) and petrochemicals (33.6%) saw significant increases. Transportation equipment and machinery & electrical electronics also expanded by 23.0% and 20.7%, respectively. In non-manufacturing, transportation services grew from 7.0% to 35.8%.
By company size, large enterprises increased from 7.1% to 20.3%, and small and medium enterprises rose from 8.5% to 14.1%.
However, due to the payment of unpaid dividends, the total asset growth rate decreased to 1.4%, down from 3.3% in Q1.
The operating profit margin, indicating corporate profitability, rose from 5.2% to 7.4%.
Manufacturing increased from 5.5% to 9.0%, and non-manufacturing rose from 4.8% to 5.4%.
As profits increased mainly in key industries such as machinery & electrical electronics and petrochemicals, dependence on debt and borrowings decreased.
The corporate debt ratio fell from 89.9% in Q1 to 86.6%. Borrowing dependence also declined from 24.9% in Q1 to 24.6%.
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