Nearly 23 percent of South Korea’s listed companies with over one trillion won ($973.7 million) annual sales failed to earn enough from business operations to cover interest expense
May 19, 2014 Leave a comment
23% of S. Korean firms with over $970mn revenue make profit short of interest expense
2014.05.07 14:55:49
Nearly 23 percent of South Korea’s listed companies with over one trillion won ($973.7 million) annual sales failed to earn enough from business operations to cover interest expense last year due to recession.
Of 159 listed companies with more than one trillion won sales in fiscal year 2013, excluding financial firms, 36 or 22.6 percent had below one times interest earned (TIE), said Chaebul.com Wednesday based on the analysis of their operating profit and interest expense.
TIE is calculated as operating profit divided by the total interest payable. A TIE under one means a company’s operating profit falls short of paying outstanding interests.
The portion of companies with less than one TIE among those earning over one trillion won sales increased to the highest in three years in 2013.
In 2011, the portion came to 17.8 percent, or 26 out of 146 corporations. The portion rose to 21.5 percent in 2012, or 34 out of 158.
Many of the corporations with negative TIE were in the air and marine transportation, shipbuilding and construction sectors, which have been in downturn since the global financial crisis.
These companies included builders such as Daewoo Engineering & Construction (E&C), Samsung Engineering, GS E&C and Hyundai Development Company, as well as listed units of STX Group such as STX, STX Heavy Industries and STX Offshore & Shipbuilding.
Listed corporations such as LG Electronics, Samsung SDI, Korean Airlines and Asiana Airlines also posted less than zero TIE.
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