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South Korea‘s well-established business groups enjoyed stellar asset growth over the past five years while newly formed business groups experienced financial troubles, data showed Thursday.
According to the data by research firm CEO Score, the combined assets of 18 conglomerates including Samsung, Hyundai Motor, LG and SK rose to 1,054 trillion won ($973.2 billion) at the end of 2012, up from 525 trillion won five years earlier.
Their combined assets took up 67.7 percent of all assets held by 51 conglomerates subject to restrictions on mutual investments and loan guarantees among their subsidiaries, up 8.2 percentage points from 59.5 percent during the cited period.
By law, affiliates of large business groups with assets of 5 trillion won or more are restricted from making equity investments in or offering loan guarantees to one another.
The combined net profits of the 18 business groups reached 60 trillion won at the end of last year, up 63.3 percent from the 37 trillion won tallied five years ago.
During the same period, 33 other business groups posted a mere 6 trillion won in combined net profits.
The ratio of the 18 groups’ combined net profits to the net profits of the 51 groups spiked 25.4 percentage points to 91 percent from 65.6 percent.
The ratio is expected to further increase at the end of this year as Woongjin and STX, which are among the 51 conglomerates, are facing severe cash shortages.
Woongjin and STX grew into key conglomerates following the 1997 Asian financial crisis, but the 2008 global financial turmoil drove them to face severe financial difficulties.
The business groups‘ flagship companies have been put under court receivership.
“The importance of controlling risks in managing companies is growing bigger and bigger rather than fast-growing strategy as the economic structure becomes complicated,” said Park Joo-geun, head of the research firm.
“The business groups, which were faced with financial difficulties over the last five years, have in common that they failed to control risks from the outside.” (Yonhap News)
According to the data by research firm CEO Score, the combined assets of 18 conglomerates including Samsung, Hyundai Motor, LG and SK rose to 1,054 trillion won ($973.2 billion) at the end of 2012, up from 525 trillion won five years earlier.
Their combined assets took up 67.7 percent of all assets held by 51 conglomerates subject to restrictions on mutual investments and loan guarantees among their subsidiaries, up 8.2 percentage points from 59.5 percent during the cited period.
By law, affiliates of large business groups with assets of 5 trillion won or more are restricted from making equity investments in or offering loan guarantees to one another.
The combined net profits of the 18 business groups reached 60 trillion won at the end of last year, up 63.3 percent from the 37 trillion won tallied five years ago.
During the same period, 33 other business groups posted a mere 6 trillion won in combined net profits.
The ratio of the 18 groups’ combined net profits to the net profits of the 51 groups spiked 25.4 percentage points to 91 percent from 65.6 percent.
The ratio is expected to further increase at the end of this year as Woongjin and STX, which are among the 51 conglomerates, are facing severe cash shortages.
Woongjin and STX grew into key conglomerates following the 1997 Asian financial crisis, but the 2008 global financial turmoil drove them to face severe financial difficulties.
The business groups‘ flagship companies have been put under court receivership.
“The importance of controlling risks in managing companies is growing bigger and bigger rather than fast-growing strategy as the economic structure becomes complicated,” said Park Joo-geun, head of the research firm.
“The business groups, which were faced with financial difficulties over the last five years, have in common that they failed to control risks from the outside.” (Yonhap News)
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Articles by Korea Herald
