Among the 10 major corporations in the country, 3 have reported that their financial situation has worsened compared to last year.
The Federation of Korean Industries (FKI) conducted a survey through Monoresearch on 1,000 large corporations (excluding public and financial corporations, with 100 responses) on the 6th, and found that 31% of the firms reported that their financial situation has worsened compared to the previous year. This figure is three times higher than the 11% that reported an improvement. The remaining 58% stated their situation was about the same.
When dividing corporations that reported a worsening financial situation by industry, the highest percentages were in construction and civil engineering (50%), metals (including steel, 45.5%), and petrochemicals and products (33.3%). It is interpreted that they are experiencing difficulties in financing due to prolonged sluggishness caused by demand decline amid economic recession and global supply glut.
Corporations identified high exchange rates (24.3%) as the most significant factor negatively impacting their financial situation. Increases in raw material prices and labor costs (23.0%) and high borrowing rates (17.7%) followed.
Despite the challenging financial situation, the forecast that corporations' demand for funds will increase this year (36%) was more than three times higher than the expectation that it would decrease (11%). It is anticipated that the demand for funds will be highest for purchasing raw materials and parts (39.7%), followed by facility investment (21.3%), repayment of borrowing funds (14.3%), and labor and management expenses (14.0%).
In this survey, 1 out of 5 firms (20%) indicated that it is difficult to cover interest expenses with their operating profits. Following the Bank of Korea's reduction of the base interest rate from 3.0% to 2.75% by 0.25 percentage points on the 25th of last month, 58% believe there will be no further cuts to the base interest rate by the end of this year.
Corporations expect that the exchange rate of the won against the dollar will peak this year at an average of 1,495.8 won, approaching 1,500 won. Specifically, the largest share predicting a range of 1,475 to 1,500 won was 28.0%, while the proportion expecting 1,500 to 1,525 won was 24%.