Over half of key listed firms see financial health worsen in 2022

Korea Exchange in Yeouido, western Seoul [YONHAP]

More than half of major listed firms in Korea saw their financial soundness worsen in 2022 amid high global interest rates and inflation, data showed Monday.

The debt-to-equity ratio of 56 out of the 106 listed companies belonging to the country's top 10 business groups increased last year from a year earlier, according to the data from the Korea Exchange.

In particular, as many as 21 companies had a debt ratio of 200 percent or higher.

The data is based on those firms' separate financial statements. The 10 leading conglomerates are Samsung, SK, Hyundai Motor, LG, Lotte, Posco, Hanwha, GS, HD Hyundai and Shinsegae.

Their financial health took a turn for the worse as those corporations fared poor in 2022 in the wake of the so-called triple whammy: high interest rates, inflation and the won's weakness against the dollar, analysts said.

"It is inevitable for most companies to see their financial soundness deteriorate due to a drop in cash holdings stemming from sluggish business amid unfavorable macroeconomic indicators, such as inflation and interest rates," said Hwang Se-woon, a senior researcher at the Korea Capital Market Institute.

Yet businesses, which have seen their debt ratios worsen rapidly, need to make efforts to improve their financial health, he added.

According to the data, insurance and securities affiliates of those conglomerates had high debt ratios last year due apparently to increased evaluation losses from bond holdings.

Hanwha General Insurance had the highest debt ratio of 8,030.9 percent as of end-December last year, which nearly rose six times from the previous year.

The debt ratio of Samsung Life Insurance soared to 1,491.6 percent last year from 808.3 percent a year earlier, with that of Hyundai Motor Securities climbing to 675.5 percent from 587.1 percent.

Yonhap