Corporate growth, profitability improve in Q3 in S. Korea: BOK

Seoul, Dec 17 South Korean companies reported improved overall growth and profitability in the third quarter, driven by robust semiconductor exports amid an artificial intelligence (AI) boom, the central bank said on Wednesday.

The combined sales of 26,067 companies subject to external audits rose 2.1 per cent from a year earlier in the July-September period, reversing a 0.7 per cent on-year decline in the second quarter, according to data from the Bank of Korea (BOK), reports Yonhap news agency.

"The increase in sales was driven by rising exports of high value-added products, such as HBM and DDR5, amid expanding global AI investment, along with higher memory prices," Moon Sang-yoon, chief of the BOK's corporate statistics team, told a press briefing.

Sales growth in the machinery and electrical and electronics industries jumped 8.9 per cent, more than quadrupling from 2.2 per cent in the previous quarter. Excluding these industries, the sales growth rate stood at around 1.1 per cent.

"The strong performance by some large e-commerce retailers, increased sales of imported electric vehicles and solid earnings at digital platform companies also contributed to the upturn," Moon added.

Profitability indicators also improved.

The operating profit margin of the surveyed companies stood at 6.1 per cent in the third quarter, up from 5.8 per cent a year earlier.

Financial stability indicators strengthened as well.

The debt-to-equity ratio declined to 88.8 per cent in the third quarter from 89.8 per cent in the second quarter, while companies' reliance on borrowing fell 0.4 percentage point to 26.2 per cent.

"Negative effects from new U.S. tariffs continued into the third quarter, but uncertainty has largely eased, and the strong performance of the semiconductor industry helped offset the impact," Moon said.

"Negative effects from new U.S. tariffs continued into the third quarter, but uncertainty has largely eased, and the strong performance of the semiconductor industry helped offset the impact," Moon said.

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