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Photo = Yonhap news |
[Alpha Biz= Kim Jisun] SEOUL, South Korea – June 11, 2025 — A record-high proportion of South Korean companies were unable to cover their interest expenses with operating income in 2024, according to the Bank of Korea’s annual Corporate Management Analysis Report released on Tuesday.
The report found that 40.9% of non-financial, for-profit corporations subject to external audits (34,167 firms) recorded an interest coverage ratio (operating profit divided by interest expense) below 100% last year. This marks a 1.9 percentage point increase from 39.0% in 2023 and is the highest level since data compilation began in 2013.
The share of companies with negative interest coverage ratios (i.e., operating losses) also rose from 27.0% in 2023 to 28.3% in 2024 — likewise the highest on record.
Despite these pressures, overall corporate profitability and growth indicators improved:
The average interest coverage ratio across all firms increased from 221.1% in 2023 to 298.9% in 2024.
Sales growth rebounded to 4.2% in 2024 from -2.0% in the previous year, driven by gains in both manufacturing (+5.2%) — led by electronics and communications equipment — and non-manufacturing sectors (+3.0%), especially transportation, warehousing, and retail.
By firm size, large corporations’ sales grew from -2.8% to 4.4%, while SMEs improved from 1.4% to 3.2%.
Asset growth also rose to 6.5% from 5.4% year-over-year.
In terms of profitability:
The average operating margin climbed to 5.4% (from 3.8%), and pre-tax profit margin rose to 5.2% (from 4.5%).
In manufacturing, the operating margin jumped from 3.3% to 5.6%, and the pre-tax margin from 5.2% to 6.3%.
In non-manufacturing, operating and pre-tax margins improved slightly to 5.1% and 3.8%, respectively.
Notably, large firms saw solid profit growth (operating margin: 3.6% → 5.6%; pre-tax: 4.8% → 5.7%), while SMEs experienced a decline (operating margin: 4.8% → 4.6%; pre-tax: 3.4% → 3.0%).
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
