30 groups see debts surge 51% in 3 years

Combined debts of Samsung, Hyundai Motor grow by 89 trillion won


The nation’s 30 biggest business groups saw their combined debts snowball over the past three years, which could undermine their financial soundness, the Fair Trade Commission said on Sunday.

According to the antitrust regulator, debts held by the top 30 groups came to 1.03 quadrillion won ($925 billion) as of March 2011, up 51.2 percent from 685.5 trillion won for the same month in 2008.

Two of the 30 groups were excluded from the calculation as Korea National Oil Corp. and Daewoo Engineering & Construction were newcomers to the top 30.

Samsung Group and Hyundai Motor Group saw their debts surge by 58 trillion won and 31.2 trillion won, respectively.

Among the groups whose debts grew by more than 10 trillion won are Hanwha (20.6 trillion), LG (19.4 trillion), Lotte (17.4 trillion), SK (16.3 trillion), Hyundai Heavy Industries (10.9 trillion) and Dongbu (10.3 trillion).

State-funded players were also included in the list. The debts of the Korea Housing & Land Corp. increased by 58.1 trillion won, followed by the Korea Electric Power Corp. with 19.2 trillion won and Korea Gas Corp. with 10.3 trillion won.

In terms of growth rate, POSCO topped the list as its debts jumped 161.9 percent from 9.8 trillion won to 25.7 trillion won.

Korea Gas Corp. saw its debt growth rate reach 117 percent, followed by STX with 115.6 percent, the Korea Railroad with 94.1 percent, Lotte with 90 percent, LS with 89.1 percent and the Korea Housing & Land Corp. with 85.9 percent.

In contrast, the 30 groups saw the growth of their equity capital stay at 43.4 percent ― from 507.1 trillion won to 727.2 trillion won ― over the corresponding period.

“The situation under which their debt growth surpassed their capital growth indicates that the nation’s conglomerate sector failed to raise soundness in their financial structures,” an FTC official said.

Seventeen out of the 30 groups saw the ratio of debt to equity worsen while only 11 players posted improved figures in the debt-to-equity ratio, the FTC data showed.

The debt-to-equity ratio of the Korea Housing & Land Corp. soared from 381.13 percent in 2008 to 560.22 percent in 2011 in the wake of protracted slump in the real estate market.

The Korea Gas Corp. also posted an undesirable jump in the ratio from 226.3 percent to 355.4 percent, trailed by Hanjin (from 174.5 to 248.8 percent), the Korea Electric Power Corp. (from 58.8 to 86.6 percent) and the Korea Railroad (from 74.8 to 109.6 percent).

Those that recorded an improved ratio included Booyoung (from 1,523.2 to 91.4 percent), Hanwha (from 510.8 to 417 percent), CJ (from 104.2 to 73.5 percent) and Daewoo Shipbuilding & Marine Engineering (from 358.7 to 245.7).

By Kim Yon-se (kys@heraldcorp.com)