Controversy over Retained Earnings
The combined retained earnings of 93 listed firms affiliated with Korea's top 10 conglomerates reached 550 trillion won (US$478 billion) in 2015, up 9 percent from a year earlier, according to an analysis made by a civil group.
The analysis came from a civil group called “Retained Earnings Redemption Movement Headquarters” consisting of 13 progressive civic organizations, which was unveiled at its press conference held at the front of FKI building on April 21.
By conglomerate, Samsung Group held the largest amount of retained earnings of 215.3 trillion won (US$187 billion) at the end of last year, a 9.4 percent increase from a year ago.
Following the largest holder, Hyundai Motor Group posted 112.6 trillion won (US$97.9 billion) for the retained earnings, up 10.2 percent year-on-year.
Those held by SK Group rose 23.7 percent to 65.6 trillion won (US$57.0 billion), followed by LG Group which recorded a 4.1 percent rise to reach 44 trillion won (US$38 billion). Lotte Group followed LG by holding 800 billion won (US$695 million), which was inched up 2.9 percent from the previous year.
The joint civic group claimed, “Last year’s real GDP growth rate stood at 2.6 percent and the household debt increased 11 percent over just one year. But conglomerates just kept their profits in their stores while the nation’s economy got worse and people’s income decreased.”
Business bodies like FKI, however, countered the argument by saying that the figures from the civic group resulted from the misunderstanding of the concept of retained earnings. Actually, the retained earnings mean the money held by a company after dividend and bonus are paid out from the after-tax income. It is different from cashable assets since the retained earnings include money to purchase real estates, machinery, facilities and so on.
As of the end of 2014, the retained earnings of the nation’s top 30 conglomerates stood at 683 trillion won (US$594 billion) and cashable assets reached just 118 trillion won (US$102 billion) or 17.3 percent of retained earnings.
The weight of cashable assets to total asset of non-financial listed companies was 9.3 percent, which was lower than those of G8 countries (22.2 percent) and the EU (14.8 percent).