“I couldn’t earn money and even interest”… Corona shock in 1 out of 4 listed companies

Last year, it was found that one out of four domestic listed companies could not even earn money to pay interest. If this condition continues for three consecutive years, the possibility of delisting will increase.

According to the results of analyzing the financial statements of 1017 non-financial listed companies on the KOSPI and KOSDAQ on the 5th, it was found that even though the operating profit of listed companies increased by 24.9% last year, one out of the four did not pay interest due to operating profit.

As such, the number of companies with an interest compensation ratio of less than 1 that cannot pay interest through operating profit was 255 last year, an increase of 6 compared to the previous year. This is equivalent to 25.1% of the 1017 listed companies surveyed. Interest compensation ratio is the value obtained by dividing operating profit by interest expense and is an indicator of how well a company can make money and pay interest back.

According to Han Kyung-yeon, many of these companies are listed on the KOSDAQ. If the interest compensation ratio is less than 1 for 3 consecutive years, it is classified as a marginal company. Marginal companies have weak debt repayment capabilities, and the proportion of companies with low credit and capital erosion is high. If business conditions deteriorate further, the risk of insolvency may increase significantly.

By company size, the gap in sales and operating profit between top and bottom 20% companies widened, and by industry, the contrast between corona19 beneficiary industries such as medical/pharmaceuticals, electric/electronics, and affected industries such as distribution and face-to-face service was sharply divided. .

In addition, the top three companies accounted for most of the increase in operating profit in the entire industry, even within the sectors where operating profit increased.

“The performance of listed companies seems good, but many companies are still in a situation where they have not escaped from the shock of Corona 19,” said Chu Kwang-ho, head of the economic policy department, and stressed that “in order to enhance corporate vitality, active policy support from the government, such as regulatory reform, is required.”

Last year, the sales of listed companies in Korea amounted to 1076 trillion won, down 1.5% from 1093 trillion won in the previous year. Operating profit increased 24.9% to 67.3 trillion won. In this regard, Han Kyung-yeon analyzed that it was due to the base effect of a significant decrease in operating profit in the previous year compared to last year, and the improvement in the margins of major industries such as semiconductors and home appliances, which enjoyed the corona 19 reflection profit.

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