S. Korea's top 50 biggest firms see 21% fall in operating cash flow in H1

Working capital of South Korea’s large companies deteriorated amid surge in their account receivables and inventories in the first half, boding badly for their investment prospects.

According to an earnings statement analysis by Maeil Business Newspaper on Wednesday, the 50 largest companies by market capitalization listed on the main bourse reported a total operating cash flow of 64.39 trillion won ($48.9 billion) during the January-June period, falling 21.1 percent from the same period of last year.

No. 1 market cap Samsung Electronics’ operating cash flow fell 5 percent to 24.59 trillion won over the same period. Operating cash flow at other household names such as LG Energy Solution, LG Chem, Celltrion, Samsung C&T, and SK bioscience reversed to outflow from inflow over the cited period.

A company’s operating cash flow refers to the amount of cash actually earned by the company’s operation activities during a set period.

The deterioration in operating cash flow during the first half of the year was mostly owed to an increase in account receivables and inventories.

The combined account receivables of the top 50 Kospi-listed companies stood at 185.5 trillion won during the first half, up 12 percent from 165.66 trillion won at the end of last year. Their cash tied up in inventories also surged 28.4 percent to 231.84 trillion won over the same period. The inventory turnover declined from 9 times last year to 7.6 times this year.

Korea’s major casino operator Kangwon Land’s cash flow from operation activities quadrupled over the same period thanks to the resumption of casino operations and an increase in visitors. Hyundai Glovis and Korean Air's also shot up by 2.4 times and 2.9 times each.

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