South Korean companies' profitability dipped to a seven-year low in 2008 with the weakening local currency leading to foreign exchange losses, the central bank said Wednesday.
The ratio of South Korean companies' pre-tax net income to sales, a key barometer of profitability, topped 2.9 percent last year, sharply down from 5.5 percent from a year earlier, according to a report by the Bank of Korea (BOK).
The ratio stood at the lowest level since 2001 when the rate reached 1.7 percent, the report said.
Although South Korean firms' sales made an advance due to higher product prices and increased exports, the South Korean won's weakness resulted in a decline in profitability as a foreign exchange loss led to a non-operating deficit, Park Jin-wook, head of the BOK's corporate statistics team, told at a press meeting.
While local firms' sales rose 19.1 percent last year, up from 9.5 percent the previous year, the South Korean won fell 25.7 percent against the U.S. dollar in the same period, added the report.
The data comes as the South Korean economy is expected to contract 2.4 percent this year, the worst performance in 11 years, due to deterioration in exports and domestic demand.
Source: Xinhua
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