Improved Corporate Performance in Q2 Amid Strong IT Industry Conditions

Export and import containers are piled up at Pyeongtaek Port. Photo by Jinhyung Kang aymsdream@

As the IT industry shows favorable conditions, the overall business performance of Korean companies in the second quarter improved compared to the first quarter.

According to the "Key Indicators of Corporate Management Analysis for Q2 2024" released by the Bank of Korea on the 11th, the year-on-year sales growth rate of Korean externally audited companies (3,940 sample surveys) in the second quarter was 5.3%, an improvement from 1.2% recorded in the previous quarter.

By industry, manufacturing (3.3% → 7.3%) rose mainly due to machinery and electrical/electronic sectors. Non-manufacturing (-1.6% → 2.6%) also turned positive, centered on electricity and gas, and transportation industries.

By size, large enterprises (3.0% → 5.4%) increased, and small and medium enterprises (SMEs) (-6.9% → 4.6%) also improved.

The Bank of Korea explained that the machinery and electrical/electronic sectors saw a significant rise due to strong demand for AI server products and the recovery of demand for general-purpose memory semiconductors, which led to semiconductor price increases. The electricity and gas sector was affected by the rise in selling prices following last year's electricity rate hikes.

Looking at profitability indicators, the operating profit margin on sales in the second quarter was 6.2%, an improvement from 3.6% in the same period last year.

Manufacturing (2.9% → 7.1%) rose mainly due to machinery and electrical/electronic sectors, while non-manufacturing (4.6% → 5.1%) increased centered on the electricity and gas sector.

By size, large enterprises (3.3% → 6.6%) increased, but SMEs (5.0% → 4.4%) declined.

Stability indicators also improved. The debt ratio in the second quarter was 88.9%, down from 92.1% in the previous quarter. The dependence on borrowings also fell from 25.7% to 25.2% during the same period. This is due to capital expansion from increased net profits and a decrease in unpaid dividends.