Listed firms' cash-generating capability worsens

By Chung Joo-won

SEOUL, Dec. 18 (Yonhap) – The amount of cash generated by major listed firms via business operation declined in the first three quarters of the year, portending a decline in their dividend payments and capital spending going forward, an industry tracker said Wednesday.

According to CEO Score, the combined free cash flow of 258 out of the top-500 listed companies in the January-September period reached a combined 12.05 trillion won (US$10.33 billion), down 58 percent, or 16.6 trillion won, from last year's 28.7 trillion won.

Free cash flow refers to cash a business generates after accounting for capital expenditures, such as buildings or equipment, and taxes.

Free cash flow indicates a company's ability to pay out dividends.

Free cash flow increased at 130 of the 258 firms surveyed, but the tally was dragged down by declines in free cash flows at the country's two largest chipmakers -- Samsung Electronics and SK hynix.

Over the cited period, Samsung Electronics registered a free cash flow totaling 309.7 billion won in the first nine months of the year, down a whopping 11.2 trillion won from a year ago, while SK hynix logged a negative cash flow of 4.94 trillion won, down 8.6 trillion won from a year earlier, according to the data.

Among other industry-leading firms, free cash flows at shipbuilder Samsung Heavy Industries declined by 1.1 trillion won and steelmaker POSCO by 1 trillion won from a year ago.

In contrast, Hyundai Motor Co., the country's leading automaker, saw its free cash flow jump by 1.86 trillion won over the cited period, and its auto-parts affiliate Hyundai Mobis logged an increase of 1.39 trillion won in cash flows during the cited period.

Samsung Life Insurance Co.'s free cash flow rose by the largest of 4.09 trillion won and Shinhan Financial Holdings' free cash flow rose by 2.10 trillion won over the cited period, the data showed.

jwc@yna.co.kr
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