South Korean steelmakers' profitability worsened in 2005 from the previous year on sluggish domestic demand and high raw material costs, but their financial health improved as a result of efforts to cut debts, an industry association said Wednesday.
The nation's 25 steel companies, which close their books in December, saw their average operating margin ratio drop to 16.7
percent last year from 17.5 percent the previous year, according to the Korea Iron & Steel Association. The companies' ratio of net profit to sales also declined to 13.3 percent from 13.8 percent.
The operating margin ratio, or the percentage of operating profit to revenue, is a key measure of a company's profitability.
The association said their combined sales climbed 6.4 percent from a year earlier to 43.9 trillion won (US$46.3 billion) last year, with total earnings rising 2.9 percent to 5.9 trillion won.
The percentage of costs to sales amounted to 78.3 percent last year, up 0.9 percentage point from the previous year, eroding their profitability, it said.
Despite the worsened profitability, the companies' financial soundness improved considerably as they stepped up efforts to reduce debts. Their average debt-equity ratio fell to 51.3 percent last year from 59.1 percent in 2004, the association said.
The companies include POSCO, the world's fifth-largest steelmaker, and Hyundai Steel Co., which is No. 2 in the domestic market. Seoul, June 7 (Yonhap News)
Steelmakers' profitability drops on weak domestic sales, costs |
