South Korean firms’ profitability weakens in Q3December 20th, 2011 - 3:15 pm ICT by IANS
Seoul, Dec 20 (IANS) 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 and administrative expenses, reported Xinhua.
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 Sep 30 from a year earlier, down from a 13.1 percent on-year expansion tallied in the second quarter.
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