In the second quarter of this year, the profitability of South Korean companies soared to its highest level since statistics began being compiled. The semiconductor boom, driven by increased investment in artificial intelligence (AI), significantly boosted the performance of the manufacturing sector, leading to a sharp upward trend in overall corporate sales and operating profits. Companies' financial health has also improved, indicating simultaneous growth and profitability.
According to the Bank of Korea's report on the '2026 Q2 Corporate Management Analysis' released on September 9, the operating profit margin for all surveyed companies reached 16.9%. This marks an increase of 11.8 percentage points from 5.1% in the second quarter of last year, the highest level since the first quarter of 2015. Just one quarter after recording a historic high of 13.2% in Q1, this new figure sets another record.
Growth has also seen significant improvement. The overall sales growth rate for companies rose to 26.7%, up 13.2 percentage points from 13.5% in the previous quarter. The sales growth rate for the manufacturing sector increased from 21.1% to 39.6%, while the non-manufacturing sector rose from 3.7% to 9.7%.
The semiconductor boom has been a key driver of high growth in manufacturing. The operating profit margin for the manufacturing sector jumped from 5.1% in the second quarter of last year to 24.0% this year, an increase of 18.9 percentage points. This is also the highest level recorded since the statistics began being compiled.
By industry, the machinery and electrical/electronic sectors saw the most significant improvement in profitability. The operating profit margin for this sector surged from 7.4% in the second quarter of last year to 43.0% this year. The operating profit margin for the electronics, video, and communication equipment sector rose to 51.3%. The sales growth rate for machinery and electrical/electronic increased from 52.1% to 88.5%, while the electronics, video, and communication equipment sector rose from 75.7% to 119.7%.
As the semiconductor market remains strong, the increase in operating profits has outpaced sales growth, demonstrating the operating leverage effect. Due to the high fixed cost structure of the semiconductor industry, increased production and sales have led to a greater conversion of additional sales into profits.
The petroleum and chemical sectors also saw improvements in profitability, with the operating profit margin rising from 2.5% last year to 9.5% this year. Analysts attribute this positive impact to improved refining margins amid the ongoing conflict in the Middle East.
While the non-manufacturing sector experienced expanded sales growth, profitability slightly declined. The operating profit margin for non-manufacturing fell from 5.1% last year to 5.0%. In the service sector, the operating profit margin for transportation dropped from 7.0% to 4.8% due to rising costs from high oil prices and detours, while the electric and gas sector fell from 5.0% to 3.9%.
By company size, large corporations showed notable performance improvements. The operating profit margin for large companies rose from 5.1% last year to 19.1% this year, an increase of 14.0 percentage points. In contrast, small and medium-sized enterprises saw a modest increase from 5.0% to 5.3%. The sales growth rate for large companies increased from 16.0% to 30.5%, while small and medium-sized enterprises rose from 2.4% to 10.2%.
Overall financial stability has also improved. The debt ratio for all companies decreased from 87.0% in the previous quarter to 84.5%, and reliance on borrowed funds fell from 23.9% to 22.8%. The debt ratio for the manufacturing sector dropped from 68.0% to 65.7%, while the non-manufacturing sector decreased from 122.9% to 120.2%. Large companies' debt ratio also fell from 83.8% to 79.8%. However, the debt ratio for small and medium-sized enterprises increased from 103.0% to 112.1%, indicating disparities in financial conditions by company size.
Looking ahead, there is interest in whether the performance improvements centered around semiconductors will continue in the second half of the year. Im Ji-u, head of the Bank of Korea's corporate statistics team, stated, "Based on strong demand for AI investment, the semiconductor market is expected to remain robust, and demand is likely to show signs of recovery, leading to continued improvements in overall indicators centered around semiconductor manufacturing." However, he cautioned that uncertainties related to the situation in the Middle East and U.S. tariff policies remain high, so trends should be monitored closely.
* This article has been translated by AI.
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