[Monitor] More manufacturing businesses post losses in 2017

The number of South Korean manufacturing companies that posted operating losses spiked in 2017, data from Statistics Korea showed.

According to the agency’s research on the corporate activities of major manufacturing businesses here, those who saw their yearly net profit ratios dip below zero percent rose 4.2 percentage points to 22.8 percent in 2017 from the previous year’s 18.6 percent. A net profit ratio refers to the ratio of net profits to net sales. A net profit ratio below zero percent translates to a net loss.

The percentage of manufacturing companies that recorded net losses in 2017 was the highest in nine years -- since 2008, when the global financial crisis hit and the figure marked 24.7 percent.

The proportion of companies with net profit ratios over 10 percent declined 1.1 percentage points year-on-year to 13 percent. Not since 2014, when it was 12 percent, has the figure been lower.

Restructuring in key industries such as shipbuilding reflected negatively on the average operating performance, observers said. The diplomatic fallout with China also adversely affected hotel and restaurant businesses.

However, semiconductor-reliant business areas such as electronic components, computers, video, audio and communications had a higher number of companies with net profit ratios over 10 percent in 2017. The figure stood at 38.1 percent, up from 29.7 percent in 2016.