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S. Korean firms face cash crunch amid financial turmoil
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The bulk of South Korea's large companies are confronted with worsening
liquidity conditions as a result of global economic uncertainty, data showed
Monday.
The annual excess cash flow forecast of 83 listed companies reached 43 trillion won (US$37 billion), nearly halving from the 74.5 trillion won outlook made at the end of July, according to the data by financial information provider FnGuide.
The excess cash flow, which excludes investment expenses from cash generated by sales, gauges a company's funding capacity. If the figure swings to red, it indicates that a firm has to rely on external sources for liquidity, becoming more vulnerable to management risks.
The fall in their excess cash flows came as cash generated from sales dipped 17.9 percent amid a global economic downturn, while expenses earmarked for investments rose around 18.3 percent, the data showed.
A dozen companies, including heavyweights such as LG Display Co. and Hyundai Merchant Marine Co., have seen their excess cash flow shift to negative territory since the end of July.
More than 80 percent of the tallied firms also saw their excess cash flow trend lower, with the figures for top automaker Hyundai Motor Co. and chip giant Hynix Semiconductor Inc. dropping 83.5 percent and 46.8 percent, respectively, according to the data.
Market watchers said companies are set to issue more corporate bonds and increase borrowings as part of efforts to secure capital on worries the ongoing economic uncertainty will continue.
South Korea's corporate debt sales totaled 30.9 trillion won in the third quarter, growing 18.1 percent from a year earlier, according to the Korea Securities Depository (KSD).
A total of 2.2 trillion won worth of corporate bonds were issued between Oct. 1 and Oct. 14, the KSD said.
Date
2011.10.17
The annual excess cash flow forecast of 83 listed companies reached 43 trillion won (US$37 billion), nearly halving from the 74.5 trillion won outlook made at the end of July, according to the data by financial information provider FnGuide.
The excess cash flow, which excludes investment expenses from cash generated by sales, gauges a company's funding capacity. If the figure swings to red, it indicates that a firm has to rely on external sources for liquidity, becoming more vulnerable to management risks.
The fall in their excess cash flows came as cash generated from sales dipped 17.9 percent amid a global economic downturn, while expenses earmarked for investments rose around 18.3 percent, the data showed.
A dozen companies, including heavyweights such as LG Display Co. and Hyundai Merchant Marine Co., have seen their excess cash flow shift to negative territory since the end of July.
More than 80 percent of the tallied firms also saw their excess cash flow trend lower, with the figures for top automaker Hyundai Motor Co. and chip giant Hynix Semiconductor Inc. dropping 83.5 percent and 46.8 percent, respectively, according to the data.
Market watchers said companies are set to issue more corporate bonds and increase borrowings as part of efforts to secure capital on worries the ongoing economic uncertainty will continue.
South Korea's corporate debt sales totaled 30.9 trillion won in the third quarter, growing 18.1 percent from a year earlier, according to the Korea Securities Depository (KSD).
A total of 2.2 trillion won worth of corporate bonds were issued between Oct. 1 and Oct. 14, the KSD said.
Source: Yonhap News (Oct. 17, 2011)