Major South Korean distributors of steel products suffered a deterioration of their profitability with a drop in their net profits last year, despite an increase in their annual sales. Some of them saw even their operating income move into the red last year, according a recent survey by the Korea Metal Journal on the annual business performance of 115 distributors across the country for 2011.
The combined annual sales of the steel distributors in 2011 amounted to KRW 20.22 trillion ($17.8 billion), up 18.9 percent from KRW 17.01 trillion in 2010. Their total operating income increased by 8.7 percent year on year to KRW 631.9 billion ($558.4 million) in the given year. However, their net profits plunged 26.7 percent to KRW 255.7 billion ($225.9 million) last year, compared with the preceding year's KRW 348.7 billion.
In 2011, the average ratio of the distributors' operating income to sales stood at 3.1 percent, a drop of 0.3 percentage points from 3.4 percent in 2010. With the shrinkage of their net profits, the average ratio of their net profits to sales dropped by 0.7 percentage points from 2.0 percent in 2010 to 1.3 percent in 2011.