Corporate Sales and Profitability Surge in Q1... Performance Strong Even Without Samsung Electronics and SK hynix

Bank of Korea Releases Q1 Corporate Business Analysis

Sales Growth Rate Surges from 2.5% to 13.5%

Operating Profit Margin Also Jumps to 13.2%, More Than Doubling

In the first quarter of this year, the growth and profitability of domestic companies improved significantly. The sales growth rate reached its highest level in three and a half years, while the operating profit margin was the highest since statistics began being compiled. As Samsung Electronics and SK hynix led the performance amid a semiconductor boom, a recovery trend was also observed in other sectors.

According to the "Corporate Business Analysis Results for Q1 2026" released by the Bank of Korea on June 23, the sales growth rate—a measure of the growth of domestic companies subject to external audit—stood at 13.5% in the first quarter of this year. This is an increase of 11 percentage points from the fourth quarter of last year (2.5%), and the highest since the third quarter of 2022 (17.5%). The Bank of Korea estimated these results based on a sample survey of 4,233 companies out of the 26,067 companies subject to external audit.

By industry, both the manufacturing and non-manufacturing sectors saw increases. Manufacturing sales surged from 4.7% in the fourth quarter of last year to 21.1% in the first quarter of this year.

The improvement in manufacturing performance is attributed to the continued boom in the semiconductor market, with the machinery and electrical/electronics sector's growth rate soaring from 18.0% to 52.1%. Within this, the electronics, video, and telecommunications equipment sector jumped from 28.9% to 75.7%.

Excluding the electronics, video, and telecommunications equipment sector, the overall sales growth rate across all industries would have dropped from 13.5% to 4.6%. This underscores the fact that certain sectors, such as semiconductors, have been driving overall performance improvement.

Nevertheless, the non-manufacturing sector also saw a turnaround, with sales rising from -0.3% in the fourth quarter of last year to 3.7% in the first quarter of this year, led by the transportation and wholesale/retail sectors.

The transportation industry rebounded, with its sales growth rate rising from -2.5% to 8.1%. This was due to higher shipping rates caused by geopolitical risks in the Middle East and increased demand for air passenger services. The wholesale and retail sector also improved its performance, thanks to strong sales across distribution companies, including import car dealers, semiconductor sellers, department stores, and convenience stores.

By company size, both large corporations and small and medium-sized enterprises (SMEs) saw increases. Large companies' sales growth rose from 4.0% in the fourth quarter of last year to 16.0% in the first quarter of this year, while SMEs saw an increase from -3.7% to 2.4%.

Profitability also improved significantly.

The operating profit to sales ratio, which demonstrates this, jumped to 13.2% in the first quarter of this year from 6% in the same period last year. This is the highest since statistics were first compiled in the first quarter of 2015.

By industry, manufacturing surged from 6.2% to 18.1%—nearly tripling in one year. This was driven by the machinery and electrical/electronics sector, where profitability jumped from 6.9% to 32.5% due to increased sales from memory price hikes and reduced fixed costs. The petrochemical sector also saw profitability improve (from 5.7% to 9.7%) as refining margins rose amid Middle Eastern geopolitical risks. Excluding Samsung Electronics and SK hynix, the operating profit margin for the manufacturing sector drops to 6.6%.

Conversely, the non-manufacturing sector experienced a slight decline in profitability (from 5.9% to 5.7%), mainly in transportation, due to the effects of high oil prices and increased operating costs from using alternative routes.

By size, both large companies (from 6.4% to 14.8%) and SMEs (from 4.1% to 4.7%) showed improvement.

The debt ratio, an indicator of financial soundness, fell to 87.0% in the first quarter of this year, down from 88.9% in the fourth quarter of last year. The dependence on borrowings also dropped slightly, from 24.4% to 23.9%.

Lee Mijoo, head of the corporate statistics team at the Bank of Korea, commented on the outlook for the second quarter, stating, "The semiconductor manufacturing sector is expected to continue leading overall indicator improvements, driven by robust demand for artificial intelligence (AI). However, uncertainties for corporate management are likely to persist due to cost burdens from fluctuations in raw material prices such as international oil, the impact of oversupply from China in key manufacturing industries like steel, chemicals, and automobiles, and the effects of U.S. tariff barriers."

This content was produced with the assistance of AI translation services.