Free Cash Flow at Korea’s Top Companies Surges on Chip Rebound (Image courtesy of Yonhap)
SEOUL, Dec. 10 (Korea Bizwire) — Free cash flow at South Korea’s 500 largest listed companies rose sharply over the past year, lifted by a rebound in the semiconductor market that strengthened liquidity at major chipmakers, according to industry data released Wednesday.
The companies — excluding financial institutions — generated a combined 69.6 trillion won ($47.3 billion) in free cash flow as of the end of the third quarter, CEO Score, a corporate tracker, said. The figure represents a 42% increase from 49.1 trillion won a year earlier. Free cash flow reflects the amount of cash left after operating costs and capital expenditures, and serves as a key gauge of a company’s ability to repay debt or return money to shareholders through dividends and interest.
Of the 500 firms, 127 posted higher free cash flow from a year earlier, while 110 companies reported declines.
Technology and electronics companies accounted for the largest contribution, generating 29.8 trillion won in free cash flow. The semiconductor sector has staged a strong recovery this year on improving chip demand and higher memory pricing, which has translated into stronger balance sheets for manufacturers.
Samsung Electronics Co., the country’s biggest chipmaker, produced the largest free cash flow in the quarter at 19 trillion won, up 42.6% on year. SK hynix Inc., Samsung’s chief rival in memory chips, more than doubled its free cash flow to 14 trillion won, CEO Score said.
South Korea’s two semiconductor powerhouses, Samsung Electronics and SK hynix (Image courtesy of Yonhap)
“Samsung Electronics and SK hynix led the sharp jump in free cash flow in the third quarter on the back of a strong chip cycle,” the report said. “Improved cash conditions appear to be feeding back into higher corporate investment.”
Outside semiconductors, Kia Corp. generated 4.3 trillion won, Korea Gas Corp. posted 4 trillion won, and HD Hyundai Heavy Industries Co. reported 3.5 trillion won.
At the same time, a number of firms operating in heavy industry, energy and construction reported weakened liquidity. Four major companies — including Hyundai Engineering and Construction Co., LG Energy Solution and Doosan Enerbility Co. — logged free cash flow deficits of 1 trillion won or more, reflecting capital-intensive investment cycles and weaker cash positions.
Ashley Song (ashley@koreabizwire.com)
