South Korean companies recorded net profit in their overseas operation in 2016 thanks to brisk sales of electronic parts and rising raw material prices, data showed on Wednesday.
According to Export-Import Bank of Korea’s analysis on 6,255 overseas subsidiaries of Korean firms, their combined sales last year fell 5.1 percent to $642.2 billion, extending the losing streak for three consecutive years. Their net profit swung to black reaching $9 billion after recording net loss of $4 billion in 2015. Operating profit slightly declined to $15.9 billion from $16.3 billion but operating margin inched up to 2.5 percent from 2.4 percent over the same period.
Manufacturing and retail and wholesale businesses accounted for 92.9 percent of the overall sales. Sales from China took up 30 percent and that from the U.S. 22.2 percent. The lion’s share of the net profit was made from the manufacturing sector with $10.2 billion and retail and wholesale sector with $2.1 billion. Despite sluggish car sales in China due to its retaliatory measures against Korean automakers over the deployment of the U.S. antimissile system, net profit margin from Chinese operations rose to 3.9 percent last year from 2.7 percent in 2015 thanks to robust sales of electronics products.
An official from the Exim Bank said that Korean firms’ overseas businesses have been showing weak performance amid global economic slowdown, but their profitability has been improving with strong sales of higher-end electronic components such as semiconductors and strengthening prices of raw materials. Korean companies expect their overseas operations to maintain recovery.
By Lee Seung-yoon and Choi Mira
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]