South Korea’s corporate profitability fell in the first quarter of 2012 from a year earlier as a rise in commodity prices drove up other expenses, the central bank said Thursday.

The average ratio of operating profit to sales, a key barometer of profitability, was 5.2 percent for the January-March period, down from 6.6 percent the previous year, the Bank of Korea said in a report based on a survey of 1,549 listed and 190 important non-listed companies.

The result still marked a gain from the 3.7 percent average ratio of operating profit reached in the fourth quarter of last year.

After peaking at 6.3 percent in the first quarter of 2011, local firms’ profitability has been trending lower.

The ratio of local companies’ pre-tax net income to sales, another gauge of profitability, stood at 6.6 percent in the first quarter, down from 7.5 percent a year earlier, the BOK said.

The decline in profits came as higher crude oil, iron ore and other commodities prices moved up and forced up overall production costs.

The central bank’s latest report showed total assets of the local businesses checked grew 2.7 percent in the first quarter from three months earlier and also increased on the 2.5 percent gain reported a year earlier. Sales expanded 10.5 percent on-year, down from a 16.9 percent rise in the first quarter of last year.

The BOK said South Korea’s economy advanced 2.8 percent on-year in the first quarter and estimated growth would reach 3.5 percent for the entire year, a decrease from the 3.7 percent tallied for 2011.

Meanwhile, the BOK said the interest coverage ratio of local companies also deteriorated from a year earlier amid worsening corporate profitability.

The average interest coverage ratio, which measures a firm’s capacity to cover financial costs with operating profit, came in at 417.7 percent in the cited period, down from 515.3 percent in the previous year.

The BOK said businesses in electronics, autos and utilities fared better than companies dealing in petrochemicals, shipbuilding and metal products, which were hit hardest by troubles facing the European region and a slowdown of growth in China. 

(Yonhap News)