The growth of our nation's corporations in the third quarter of this year slowed as the recovery in demand for general-purpose semiconductors decelerated. However, profitability showed slight improvement, driven by increased sales of artificial intelligence (AI) and high-specification products.
According to the '2024 third quarter corporate management analysis' released by the Bank of Korea on the 17th, sales for 23,137 corporations subject to external audits increased by 4.3% year-on-year in the third quarter of this year. The increase was smaller than the previous quarter's 5.3%, which was the highest since the fourth quarter of 2022 (6.9%).
Breaking down the sales growth rate by institutional sector, manufacturing decreased from 7.3% in the second quarter to 4.9% in the third quarter. Although there was an increase in demand for AI-related semiconductors and export prices rose in the machinery and electrical electronics sectors, the recovery in demand for general-purpose semiconductors such as PCs and smartphones was sluggish, resulting in a significant slowdown from 20.7% in the previous quarter to 13.7% in the third quarter.
In contrast, non-manufacturing sales growth rate increased by 3.5% year-on-year, higher than the previous quarter (2.6%). This was influenced by the growth rate in retail sales, which increased to 3.2%, led by large electronic commerce distribution companies. By corporation size, the sales growth rate of large corporations decreased from 5.4% in the second quarter to 4.7% in the third quarter, and small and medium enterprises (SMEs) also decreased from 4.6% to 2.4% during the same period.
Profitability indicators improved. The operating profit margin as a percentage of sales for corporations surveyed was 5.8% in the second quarter, up from 4.0% a year ago. The operating profit margins of both manufacturing and non-manufacturing improved to 6.1% and 5.4% respectively from 4.0% and 4.1% a year ago. Manufacturing saw increases led by machinery and electrical electronics (0.9%→ 8.8%) and transport equipment (4.1%→ 6.6%), while non-manufacturing saw increases led by the transport industry (7.9%→ 13.1%).
The pretax profit margin as a percentage of sales (5.6%) also rose compared to the third quarter of last year (5.1%). By industry, both manufacturing (5.7%→ 5.9%) and non-manufacturing (4.3%→ 5.1%) increased. Looking at corporation size, large corporations (5.3%→ 5.9%) saw an increase, while small and medium enterprises (SMEs) (4.1%→ 3.9%) saw a decrease.
In terms of financial stability indicators, the debt ratio of all corporations fell from 88.9% in the second quarter to 87.8%, while the dependence on borrowing fund increased from 25.3% to 25.4%. The debt ratio is at its lowest level in two years and nine months since the fourth quarter of 2021 (86.4). Kang Yeong-gwan, a team leader at the Bank of Korea's corporate statistics department, noted, “While the growth of external audit corporations slowed in the third quarter of this year, profitability improved. However, excluding transport equipment and transport industry, the growth of operating profits also decelerated.”