Seoul, Sep 10 (IANS) South Korean companies reported weaker overall growth and profitability in the second quarter due mainly to the impact of the United States’ aggressive tariff scheme, the central bank said on Wednesday.

Combined sales of 26,067 companies subject to external audit fell 0.7 percent from a year earlier in the April-June period, reversing from a 2.4 percent on-year gain in the first quarter, according to data from the Bank of Korea (BOK), reports Yonhap news agency.

It marked the first time since the fourth quarter of 2023 that sales growth turned negative.

Sales in the manufacturing sector declined 1.7 percent in the second quarter, compared with a 2.8 percent increase in the previous quarter, while sales growth in the non-manufacturing sector slowed to 0.3 percent from 1.9 percent over the same period.

“Weak exports in the petrochemical industry affected the overall corporate growth. The U.S.’ tariff hikes also had an impact on corporate performances, particularly steel and automakers,” BOK official Moon Sang-yoon told a press briefing.

“Though a tariff agreement has been reached, uncertainty remains high,” he added.

Profitability indicators also worsened. The operating profit margin of all surveyed companies stood at 5.1 percent in the second quarter, down 1.1 percentage points from a year earlier.

By company size, large firms saw their operating profit margin fall from 6.6 percent to 5.1 percent, while small and medium-sized enterprises (SMEs) recorded an increase from 4.4 percent to 5 percent.

Financial stability indicators remained nearly unchanged.

The debt-to-equity ratio of the surveyed companies stood at 89.8 percent in the second quarter, slightly down from 89.9 percent in the first quarter.

Their reliance on borrowing went up to 26.6 percent in the cited period from the previous quarter’s 25 percent, the data showed.

—IANS

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