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Big biz operating profit ratios fall in 2013: report

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(Globalpost/GlobalPost)

SEOUL, March 10 (Yonhap) -- Operating profit ratios of most large South Korean companies fell last year in the face of tough economic challenges, a report by a local conglomerate researcher said Monday.

According to Chaebul.com, sales and operating profits of 84 listed affiliates belonging to the country's top 10 business groups, excluding financial firms, reached 695.3 trillion won and 48.6 trillion won, respectively, in 2013, up 2.3 percent and 2.5 percent from the year before.

It, however, said in the all important ratio of operating profit to net sales -- often viewed as a barometer of corporate health -- numbers contracted noticeably.

"With the exception of SK and LG groups, profit ratios of the other eight conglomerates all lost ground from the year before," the corporate information provider said, adding that tough economic conditions at home and abroad played a role in the weaker earnings numbers.

In the case of Samsung, South Korea's largest business group, the 13 assessed affiliates posted sales and operating profits of 223.1 trillion won and 23.4 trillion won each. These numbers represent a gain of 8.8 percent and 6.6 percent from the year before, but the combined operating profit ratio stood at 10.48 percent, down 0.22 percentage point from 2012.

For Hyundai Motor Group, the world's fifth-largest automotive conglomerate, sales and operating profit stood at 132.4 trillion won and 9.7 trillion won. Both represent a drop from the year before, with the operating profit ratio falling 0.6 percentage point to 7.35 percent.

The drop in the ratio numbers is the sharpest for the carmaking conglomerate since the 2008 global financial crisis.

Chaebul.com said such a poor showing was repeated in POSCO, the country's No. 1 steelmaker, and Hyundai Heavy Industries Group.

"Both conglomerates reported drops in sales and operating profits last year vis-a-vis 2012, with operating profit ratios falling 0.7 percentage point and 2.61 percent points each," the think tank said.

Seven POSCO and three Hyundai Heavy affiliates were counted in the tally.

In the case of Lotte Group, seven listed companies posted better sales and operating profits even as the operating profit ratio contracted 0.32 percentage point.

Hanwha Group sales rose to around 9.1 trillion won, yet the ratio of operating profit net sales stood at 2.51 percent, or a drop of 0.75 percent from the year before.

For GS and Hanjin groups, operating profits were in the red by 400 billion won and 300 billion won each. Both conglomerates reported profits the year before.

GS has been hurt by the downturn in the petrochemical and oil refining sector, while Hanjin has been affected by the sluggish shipping market.

On the other hand, the 16 companies belonging to the SK Group, led by SK hynix Inc., the world's second-largest memory chipmaker, saw their operating profit surge 93.6 percent to 7.2 trillion won. Its operating profit ratio almost doubled to 10.8 percent from 5.72 percent.

LG Group's sales and operating profits gained 102.2 trillion won and 3.5 trillion won, with the operating profit ratio of its 11 listed affiliates that were assessed edging up 0.02 percent point to 3.45 percent.

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http://www.globalpost.com/dispatch/news/yonhap-news-agency/140309/big-biz-operating-profit-ratios-fall-2013-report