Last year, while the revenue growth of domestic companies slowed, their profitability improved. However, the performance gains were concentrated in certain sectors, such as semiconductors and large corporations, widening the gap between companies. More than 40% of firms with interest expenses could not cover their interest payments with operating profits.
According to the '2025 Annual Corporate Management Analysis' released by the Bank of Korea on October 21, the revenue growth rate for 982,767 non-financial corporations in South Korea was recorded at 2.4%, a decline of 1.3 percentage points from 3.7% in 2024.
By sector, the revenue growth rate for manufacturing dropped from 4.6% in 2024 to 2.4% last year. Similarly, the growth rate for non-manufacturing decreased from 2.9% to 2.3% during the same period.
In manufacturing, the revenue growth rate for coke and petroleum products fell from 1.4% to -7.6%, dragging down the overall growth. The electronics, video, and communication equipment sector also saw a decline from 19.6% to 14.2%, although it maintained a double-digit growth rate.
In non-manufacturing, the revenue growth rate for transportation and warehousing plummeted from 11.6% to 2.6%. The construction sector's decline worsened from -2.8% to -7.6%.
Despite the slowdown in revenue growth, corporate profitability improved. The overall operating profit margin for all companies rose to 5.2%, up 0.6 percentage points from the previous year’s 4.6%. The pre-tax net profit margin also increased from 4.3% to 5.2%.
In manufacturing, the operating profit margin increased from 5.1% to 6.3%. Notably, the electronics, video, and communication equipment sector, which includes semiconductors, saw a significant rise from 8.3% to 14.0%. The shipbuilding and other transportation sectors also jumped from 6.4% to 11.6%. The operating profit margin for non-manufacturing improved slightly from 4.1% to 4.3%, primarily driven by the electricity and gas sector.
The profitability gap between large and small companies widened further. The operating profit margin for large corporations increased from 5.6% in 2024 to 6.7% last year, while small businesses saw a decline from 3.0% to 2.8%.
Overall corporate profitability improved, but the number of companies struggling to manage interest burdens increased. Last year, the proportion of companies with an interest coverage ratio below 100% rose to 42.9%, up 0.1 percentage points from 42.8% the previous year. This marks the highest level since the Bank of Korea began tracking this statistic in 2009. An interest coverage ratio below 100% indicates that annual profits do not cover interest and other financial costs.
Indicators of financial stability generally improved. Last year, the overall debt ratio for all companies decreased to 116.2%, down 3.7 percentage points from 119.9% the previous year. The reliance on borrowed funds also fell from 31.0% to 30.4%.
Lee Mi-joo, head of the Bank of Korea's corporate statistics team, stated, "Overall, corporate profitability indicators have improved, but the benefits are concentrated among large and larger firms."
She added, "While the proportion of companies with an interest coverage ratio below 100% has increased compared to the previous year, indicators for small businesses show improving profitability in the first and second quarters of this year. However, it is uncertain whether this trend will continue through 2025."
* This article has been translated by AI.
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