Major Korean firms experience 10% surge in inventories in H1

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South Korea’s major corporations have witnessed a 10 percent surge in inventories in the first half of this year vs. a year ago, amid the impact of an economic downturn, a survey showed on Tuesday.

According to market tracker Leaders Index on Tuesday, which analyzed the inventory dynamics of 196 out of the top 500 revenue-generating companies that disclosed their inventory assets in their biannual reports this year, the amassed inventory assets for this group of companies in the first half of this year reached 166.47 trillion won ($124.31 billion), up 9.6 percent from 151.53 trillion won a year ago. This is an increase of a whopping 65.5 percent compared to 100.35 trillion won two years ago.

Inventory assets include goods, products, and semi-finished goods, excluding work-in-process products and raw materials.

Goods refer to items that a company has purchased from other companies, such as through imports. Products are finished goods produced by a company. Semi-finished goods refer to intermediate products that require additional processing but are still sellable.

Work-in-process products refer to items that are in the manufacturing process to become products or semi-finished goods and cannot be sold in that state.

By industry, inventories increased in all but five of the 17 major industries, including petrochemicals, steel, and transportation.

Looking at the growth rate by industry excluding holding companies, the food and beverage industry saw the largest increase in inventories.

The inventory assets of 19 food and beverage companies increased by 30.9 percent, or 1.96 trillion won, to 4.64 trillion won in the first half of this year from 3.55 trillion won in the first half of last year.

[Courtesy of Dongwon Industries]

Major food and beverage companies that saw a sharp increase in inventories include Dongwon Industries Ltd. (up 150.2 percent, or 527.4 billion won), Lotte Wellfood Co. (112.2 percent, or 135.7 billion won), HiteJinro Co. (67.4 percent, or 71.7 billion won), Lotte Chilsung Beverage Co. (43.5 percent, or 72 billion won), and Ottogi Corp. (27.9 percent, or 49.2 billion won).

Inventories of the 25 automotive and auto parts companies totaled 26.56 trillion won in the first half of this year, up 24.6 percent from 21.32 trillion won, a year earlier.

KG Mobility Corp. (formerly SsangYong Motor Co.) saw the largest increase in inventory in the sector. KG Mobility’s inventory surged 250.4 percent to 275.8 billion won from 78.7 billion won.

Hyundai Motor Co. and Kia Corp. also showed double-digit growth rates, rising 43.7 percent, or 3.35 trillion won, and 29.0 percent, or 1.81 trillion won, respectively.

The three tire companies, on the other hand, saw a decrease in inventory assets. The inventory of Hankook Tire & Technology Co. was down 4.8 percent, or 82.5 billion won, Nexen Tire Corp. 6.3 percent, or 26.2 billion won, and Kumho Tire Co. 9.0 percent, or 54.9 billion won.

Inventories of 20 companies in the IT and electronics sector rose by 15.3 percent, or 7.72 trillion won to 58.20 trillion from 50.49 trillion a year ago.

For the first half of this year, Samsung Electronics Co. and SK hynix Inc. reported inventory figures of 39.26 trillion won and 4.88 trillion won, respectively, marking increases of 19.9 percent and 110.7 percent. This uptick occurred despite the ongoing curtailment of semiconductor production.

Contrastingly, LG Group’s triad of electronics affiliates - LG Electronics Inc., LG Innotek Co., and LG Display Co. - showcased a divergent narrative. These entities exhibited inventory contractions of 13.7 percent, 20.9 percent, and 59.1 percent, respectively, compared to a year ago.