South Korean automakers, steelmakers and others are expected to see their profitability decline as they lose their foothold in overseas markets due mainly to the weakening Japanese yen, a report said Thursday.

According to the report compiled by the Korea Trade-Investment Promotion Agency, Japanese carmakers saw their combined sales in the U.S. soar 16 percent last month as the yen extended its loss against the U.S. dollar.

The South Korean steelmakers are also expected to face a decline in their profitability on increased competition in overseas markets as Japanese steel mills benefit from the weakening yen, it said.

“South Korean companies are likely to see a fall in their sales in the Asian region, among other areas, as they are in direct competition with Japanese rivals,” the report said.

The Korean won gained 7.6 percent against the U.S. dollar last year from a year earlier, while it rose 19.6 percent against the Japanese yen over the same period.

The strength of the South Korean won comes from a massive credit injection by those countries in order to prop up their economic recoveries.

The South Korean currency is expected to gain more ground going forward as they will likely continue such quantitative easing steps. The report said the weaker yen may have a limited impact on South Korean IT and telecommunication players largely due to the strong preference for South Korean goods.

Also, South Korean shipbuilders have an edge over Japanese rivals in specialty ships and offshore facilities, which will help ease the impact of the weakening yen on their business performance, the report said. (Yonhap News)