Most of the listed companies in South Korea saw sales and operating profits decrease this past year, including giants like Samsung Electronics and Hyundai Motor. In addition, the largest number of companies experienced credit downgrades in the nation since 1999.
A total of 41 of the 373 companies that were appraised by the Korea Investors Service (KIS) last year were downgraded. Only fifteen were upgraded, which is also the lowest amount in fifteen years. Yang Jin-soo, an analyst at KIS, said, “Since 2010, more companies have faced a decline in their ratings. Last year, downgrades were made in every sector and every ratings bracket.”
According to the Federation of Korean Industries as well, the combined profits of 1,103 non-financial firms traded on the nation's stock exchanges dropped a collective 17.9 percent year-on-year during the first three quarters of 2014. Sales also fell in aggregate by 1.5 percent over the same period.
The country's economy has already been reported with growth less than expected, with two sets of rate cuts by the Bank of Korea last year. Growth was estimated to be 4 percent for last year, but fell short by 0.7 percent.
It can be surmised that declining earnings among the country's 10 largest companies sales-wise is a contributing factor. The combined operating profits of these companies dropped 31.6 percent year-on-year during the first three quarters of last year.
Head of the FKI's financial and tax team Hong Sung-il stated, “Manufacturers and major global companies, which account for a large portion of the South Korean economy, have fallen into a slump.”