Korea’s Aggregate Manufacturing Margin Hits 24 Percent, the Median Manufacturer 4.4
Operating profit at South Korea’s externally audited manufacturers reached 24.0 percent of sales in the second quarter, against 5.1 percent a year earlier, the central bank said on Wednesday.
Non-manufacturing companies went from 5.1 percent to 5.0 percent over the same year. The two halves started at the same place and one of them did not move.
The gap opened in four quarters, not in one
| Operating profit to sales, percent | Q2 2025 | Q1 2026 | Q2 2026 |
|---|---|---|---|
| Manufacturing | 5.1 | 18.1 | 24.0 |
| Non-manufacturing | 5.1 | 5.7 | 5.0 |
As published. The intervening quarters ran 7.1 and 8.6 percent for manufacturing and 5.0 and 3.9 for non-manufacturing. The bank compares profitability year on year and growth and stability against the previous quarter. Its sample covers 4,260 companies drawn from a population of 26,509 externally audited firms.
Manufacturing profitability is 4.71 times its year earlier level on our calculation, a rise of 18.9 percentage points, while non-manufacturing fell 0.1 points. The all-company figure the bank leads with, 16.9 percent against 5.1 percent, is the weighted result of those two lines and describes neither of them.
The typical manufacturer is nowhere near 24 percent
The bank publishes a second set of figures for exactly this problem, and they change how the headline should be read. Its quantile annex, covering the 2,156 listed companies in the sample, puts the median listed manufacturer’s operating margin at 4.4 percent in the quarter. The firm at the 75th percentile earned 11.6 percent, and the firm at the 25th percentile lost 2.4 percent.
So the aggregate of 24.0 percent sits above three quarters of the listed manufacturers in the bank’s own sample. It is a sum, not an average experience, and the distance between it and the median is 19.6 percentage points on our calculation.
The bank says why it publishes the quantiles at all, in a note on the same page: indicators compiled by aggregating individual companies’ financial statements are heavily influenced by the business performance of a handful of large companies, and the quantile statistics exist to supplement that limitation. It does not name the companies, and no figure excluding any of them appears anywhere in the release.
The median has moved, but modestly. It ran 3.2 percent a year earlier and 2.8 percent in the first quarter, so the typical listed manufacturer improved by 1.2 percentage points over the year on our calculation, against 18.9 points for the aggregate.
Sales and balance sheets diverge the same way
Manufacturing sales grew 39.6 percent against 21.1 percent in the previous quarter, and non-manufacturing 9.7 percent against 3.7 percent, so manufacturing is growing 4.08 times as fast on our calculation.
Manufacturing debt to equity is 65.7 percent and non-manufacturing 120.2 percent, a gap of 54.5 points on our calculation. Borrowing dependency is 17.7 percent against 30.2 percent.
Pre tax profit reached 23.1 percent of sales for all companies and 34.0 percent in manufacturing, against operating profit of 16.9 and 24.0 percent. Pre tax profitability above operating profitability means income arriving from outside operations, and the release contains no breakdown of non-operating income and no explanation of the gap. We looked for one and it is not there.
The bank’s own summary is that growth, profitability and stability all improved, with no qualification on the magnitude.
Why it matters: The headline says Korean manufacturing earns 24 cents of operating profit on every hundred of sales. The bank’s own quantile table says the middle manufacturer earns 4.4, and that both figures come from the same document is the point. A number this concentrated describes a small group of very large exporters rather than a sector, and reading it as a sector would be the error. Read with the national income figures the bank published yesterday, where income grew far faster than output on an export price effect, the two releases point at the same place, though they measure different populations and neither confirms the other.
Outlook: The third quarter analysis is due in December. Three things to watch: whether the median listed manufacturer moves, since it has sat between 2.0 and 4.4 percent for five quarters; whether the non-manufacturing line moves at all, having stayed between 3.9 and 5.7 percent over the same span; and whether the bank breaks out the non-operating income that currently makes pre tax profitability exceed operating profitability without explanation.
Sources: Bank of Korea.
