Hoarding Cash
It has been found that major Korean conglomerates are still busy hoarding cash rather than making aggressive investments.
According to data from CEO Score, the combined cash and cash equivalents of the 171 listed subsidiaries of the 30 leading chaebols, excluding financial companies, added up to 157.7 trillion won (US$148.1 billion) last year, 18.3 percent greater from the 133.36 trillion won of the previous year. The amount is equivalent to approximately 50 percent of the country’s total national budget for 2012.
It is said that these companies are having a hard time finding an investment target amid the Fed’s tapering of quantitative easing, the weak yen policy of Japan, and the slowdown of the Chinese economy. In addition, the top three conglomerates – Samsung Group, Hyundai Motor Group, and SK Group – accounted for 70.1 percent, while the top 10 took up 88.4 percent of the total amount.
The Samsung Group was found to have approximately 60 trillion won (US$56 billion) on hand in cash and cash equivalents, recording a 40 percent growth from a year earlier. It was followed by the Hyundai Motor Group (39.5 trillion won, US$37 billion, 14.2 percent up) and the SK Group (10.96 trillion won, US$10.3 billion, unchanged). The combined amount reached no less than 110.48 trillion won (US$103.74 billion), and their ratio increased by 3.8 percentage points from the previous year’s 66.3 percent.
The other entries on the top 10 list were LG (9.14 trillion won, US$8.5 billion, 14.0 percent up), POSCO (7.62 trillion won, US$7.16 billion, 11.1 percent up), Lotte (3.94 trillion won, US$3.70 billion, 22.7 percent up), GS (3.18 trillion won, US$, 18.7 percent up), KT (2.32 trillion won, US$2.99 billion, 4.4 percent down), Hanjin (2.13 trillion won, US$2.0 billion, 15.0 percent down) and Hyundai Heavy Industries (1.92 trillion won, US$1.8 billion, 14.7 percent up). The 10 biggest chaebols’ cash and cash equivalents totaled 139.4 trillion won (US$130.9 billion). Their sum for 2012 had been 114 trillion won.
By company, Samsung Electronics kept 53 trillion won (US$49.8 billion), to top the chart. The amount increased by as much as 46.5 percent from a year ago. It was followed by Hyundai Motor Company (21.7 trillion won, US$20.3 billion), POSCO (7.1 trillion won, US$6.67 billion), Hyundai Mobis (6.66 trillion won, US$6.25 billion), Kia Motors (6.35 trillion won, US$5.96 billion), SK Innovation (2.96 trillion won, US$2.78 billion), SK Hynix (2.79 trillion won, US$2.62 billion), LG Electronics (2.7 trillion won, US$2.54 billion), LG Display (2.32 trillion won, US$2.18 billion) and Hyundai Engineering & Construction (2.15 trillion won, US$2.02 billion).