Fourth-quarter earnings results by companies listed on the Korea Exchange show a marked deterioration in profits. The strengthening of the won against the Japanese yen in the second half of last year seems to have had a significant impact for many major firms.

According to Woori Investment and Securities, about 30 percent of the 100 listed companies that have already announced their fourth-quarter results posted losses.

Twelve out of 42 major listed companies whose quarterly revenues exceed W1 trillion (US$1=W1,093) made a loss in the last three months of 2012.

"Most companies posted marginal increases in sales but their profitability declined," Woori said. The brokerage attributed the deteriorating profits to the drawn-out recession compounded by the strong won, which makes Korean products more expensive in markets where they compete with Japanese goods.

The won strengthened almost 4 percent in the quarter and the trend was expected to continue this year. "The weak yen is likely to reduce earnings for Korean companies further," said Cho Yong-joon at Shinyoung Securities.