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Revenue in S.Korean manufacturers post first negative growth in 2014

Xinhua, October 27, 2015 Adjust font size:

Revenue among South Korean manufacturers posted the first negative growth last year, indicating a slowdown in the economy's main growth engine, central bank data showed Tuesday.

Revenue of local profit-making enterprises, including manufacturers, grew 1.3 percent in 2014 from a year earlier after rising 2.1 percent in the previous year, according to the Bank of Korea (BOK).

It was based on the bank's assessment of 530,641 profit-making companies, including 122,097 manufacturers. The subjects excluded insurers and financial firms.

Sales in manufacturers shrank 1.6 percent in 2014, marking the first minus growth since the BOK began compiling the data in 1961. It was down from the previous year's 0.5 percent increase.

The negative increase was attributable to global weak demand for smartphones, produced by local tech firms like Samsung Electronics, and lower crude oil prices that reduced export prices of oil products.

Revenue in the electrical and electronics sector tumbled 5.5 percent in 2014 after rising 3.8 percent in 2013, with those in the oil-refining and chemical industry sliding 1.6 percent last year after falling 0.7 percent the prior year.

The ratio of operating profit to revenue for all companies declined from 4.1 percent in 2013 to 4 percent in 2014. The figure for manufacturers slumped from 5.3 percent to 4.2 percent in the cited period.

The number of companies, which cannot afford even interest payment with operating profit, increased last year.

The percentage of companies with less than 100 percent of the interest payment ratio, which measures the rate of operating profit to borrowing costs, was 32.1 percent of the total in 2014, up 0.8 percentage points from the prior year. Enditem