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(Photo= Yonhap news) |
[Alpha Biz= Reporter Kim Sangjin] According to a survey by the Korea Chamber of Commerce and Industry (KCCI) among 400 domestic companies, it was revealed that 3 out of 10 companies are facing financial difficulties due to the sustained benchmark interest rate of 3.5% for the past 19 months since January last year.
The most significant issue reported by 31.3% of the companies was the deterioration of financial conditions due to increased interest costs, stemming from their experience with high-interest rate periods. Following this, difficulties in securing new funds (27.8%), implementation of emergency cost-saving measures (16.5%), and delays or suspensions in equipment investment and research and development (10.5%) were cited as subsequent challenges.
Regarding the first half-year operational performance outlook, the survey indicated that 55.2% of the companies expect operating profits to exceed interest costs, indicating profitability. Conversely, 30.2% expect operating profits to be similar to interest costs, while 14.6% foresee losses.
Furthermore, nearly 44.8% of the surveyed companies are in a situation where their interest costs surpass their operating profits or are operating at a loss if interest payments are included, highlighting the financial strain many firms are facing.
The challenges are notably more pronounced among small and medium-sized enterprises (SMEs) compared to large corporations and mid-sized firms. SMEs, with smaller sales and asset sizes, face higher loan barriers and are more vulnerable under high-interest rate conditions.
Recent performance deterioration among companies is substantiated by actual statistics. According to the Bank of Korea, the proportion of domestic companies where interest costs exceed operating profits increased from 34.6% in 2022 to 40.1% last year, indicating a significant rise in financial strain within a year.
Additionally, the corporate loan delinquency rate for the first quarter of this year stood at 0.48%, marking the highest level since the first quarter of 2020.
These findings underscore the ongoing challenges faced by Korean companies amidst prolonged high-interest rate environments and economic uncertainties.
알파경제 Kim SangJin (letyou@alphabiz.co.kr)
