By Lee Hyo-sik
Staff Reporter
Korea Land & Housing Corp. (LH), Korail and other public enterprises saw their debts surge last year as they borrowed a record amount of money to stay afloat amidst the stagnant real estate market and other unfavorable economic conditions.
The Ministry of Strategy and Finance said Friday that the outstanding debts of Korea's 23 largest state firms totaled 213.2 trillion won in 2009, sharply up 20.4 percent from 177.1 trillion won a year earlier. But their combined assets grew at a slower rate of 13.6 percent, reaching 352 trillion won. Their debt-to-equity ratio jumped to 153.6 percent from 133.5 percent over the one-year period.
In particular, state companies in the real estate sector took the full blunt of the worldwide economic slump last year, with their combined debt soaring by 24.3 trillion won to 111.8 trillion won from the previous year.
More particularly, the debt of LH, Korea's public housing and social infrastructure builder, increased by 23.5 trillion won to 109.2 trillion won in 2009. This pushed its debt ratio to 524.5 percent, as they had to borrow more money to pay for the skyrocketing financing costs of housing development. Also, the liabilities of the Korea Housing Guarantee went up by 900 billion won to 2.2 trillion won, pushing up its debt ratio to 524.5 percent, partly a result of too many unsold apartments across the country.
Transportation sector companies saw their combined debts increase by 4.8 trillion won to 40.1 trillion won as they borrowed money to expand facilities. The debt of Korail, the nation's railway operator, reached 8.8 trillion won last year, up 2 trillion won from 2008, while Korea Express Corp, the highway operator, now owe creditors a total of 21.8 trillion won, up 1.6 trillion won.
``Housing and real estate-related enterprises were hit hard by the sluggish property market in 2009 and had to borrow more money than ever to finance its operating expenses. Transportation firms also saw their debts increase as they needed to finance infrastructure development projects,'' a ministry official said.
The combined assets and debts of public firms in the energy sector rose by 9.2 trillion won to 115.3 trillion and 6.7 trillion won to 59.6 trillion won, respectively.
Korea Electric Power Corp. (KEPCO) saw its debts jump by 3 trillion won to 28.9 trillion won as it raised funds from outside to boost its electricity-generating capacity, pushing up its debt ratio to 70.3 percent from 63.3 percent.
On the other hand, liabilities of the Korea Gas Corp. inched up only to 17.8 trillion won from 17.7 trillion, with its surging assets pushing down its debt ratio to 344.3 percent from 438 percent.
The official attributed the overall debt increase in the publicly-run energy sector to larger facility investments in a bid to meet growing demand for electricity and other utility services.
In earnings performance, KEPCO stood out among the 23 public enterprises as the electricity generator cut its net loss sharply by 2.9 trillion won to 77.7 billion won in 2010 from 2.95 trillion won the previous year, thanks to hikes in utility fees and tamer international oil prices.
The combined revenue of the companies rose by 0.2 percent to 95.4 trillion won, with net profit surging by 706.7 percent to 2.87 trillion won.
But excluding KEPCO, the remaining 22 firms suffered a decline both in revenues and net profits. The combined revenues dropped to 61.7 trillion won from 63.7 trillion won, while their net profits fell to 2.4 trillion won from 3.2 trillion won.