Corporate sales, profitability drop in 2023 amid higher costs, economic slump

South Korean companies' sales growth declined and their profitability narrowed last year, central bank data showed Wednesday, as higher borrowing costs and increased prices of raw materials ate into their bottom lines amid an economic slump. Corporate sales growth slowed to 2 percent last year from a year earlier, sharply slowing from the previous year's 16.9 percent gain. The data is based on a review of 32,032 companies that are subject to external audits. With a slowdown in their sales growth, the firms' profitability also narrowed. Their operating profit-to-sales ratio stood at 3.8 percent last year, compared with a 5.3 percent advance the previous quarter. The slowdown in sales and profitability came amid higher borrowing costs and increased prices of raw materials, such as oil, and an economic slowdown. The firms' average debt-to-equity ratio came to 102.6 percent last year, down from 105 percent a year ago. South Korea's central bank held its key interest rate steady at 3.5 percent for the 11th straight time last month in the face of prolonged restrictive stances in major economies and still-high inflation. Consumer prices, a key gauge of inflation, rose 2.7 percent on-year last month, still higher than the central bank's target of 2 percent. Last month, the BOK heightened its growth projection for the year. The central bank jacked up its growth estimate to 2.5 percent for the year, up from its earlier projection of 2.1 percent, but slashed the 2025 growth outlook to 2.1 percent from 2.3 percent. Source: Yonhap News Agency