S. Korea's corporate profitability hits 4-year high in 2025 amid widening polarization

SEOUL, Oct. 21 (Xinhua) -- South Korea's corporate profitability hit a four-year high last year on the back of strong performances in the semiconductor and shipbuilding sectors amid a widening polarization between large and small companies, central bank data showed Wednesday.

The average ratio of operating profit to revenue for 982,767 surveyed companies, including 187,804 manufacturers and 794,963 non-manufacturers, rose 0.6 percentage points from a year earlier to 5.2 percent in 2025, marking the highest profitability since 2021, according to the Bank of Korea (BOK).

The operating profit-to-sales ratio for manufacturers gained 1.2 percentage points to 6.3 percent, fueled by robust sales of high-value-added semiconductors and high-value vessels.

The ratio for non-manufacturers added 0.2 percentage points to 4.3 percent last year.

Despite the overall recovery, the gap between large conglomerates and smaller firms widened significantly.

The operating profit margin for large corporations climbed 1.1 percentage points to 6.7 percent in 2025, hitting the highest since 2021.

The margin for small and medium-sized enterprises (SMEs) went down 0.2 percentage points to 2.8 percent, marking the lowest since the BOK began compiling the data in 2009.

Financial stability improved, with the overall debt-to-equity ratio sliding from 119.9 percent in 2024 to 116.2 percent in 2025, the lowest level since 2019.

However, top-line growth momentum slowed, with the overall revenue growth rate dropping 1.3 percentage points to 2.4 percent last year.

Manufacturing revenue growth decelerated from 4.6 percent in 2024 to 2.4 percent in 2025, and non-manufacturing growth slowed from 2.9 percent to 2.3 percent.

The interest coverage ratio, or the ratio of operating profit to financial expenses, advanced to 292.7 percent in 2025 from 244.1 percent in the previous year thanks to the enhanced operating profit margin.

Nevertheless, the proportion of financially vulnerable companies with the interest coverage ratio below 100 percent edged up 0.1 percentage points to 42.9 percent in 2025, reaching the highest since 2009.

It meant that nearly 43 percent of South Korean businesses failed to generate enough operating profit to cover the interest costs last year.