Free cash flow of top 500 firms increases sharply in Q3 amid chip boom: data

A Korean national flag and a Samsung flag are seen at the tech giant's headquarters in southern Seoul, Jan. 31. Korea Times photo by Ha Sang-yoon

Free cash flow of Korea's top 500 listed firms rose sharply over the past year as a positive business cycle in the semiconductor market boosted liquidity at major chipmakers, industry data showed Wednesday.

According to the data by corporate tracker CEO Score, the 500 listed firms, excluding financial companies, recorded a combined 69.6 trillion won ($47.3 billion) in free cash flow as of the third quarter, up 42 percent from 49.1 trillion won a year earlier.

Free cash flow refers to the amount of cash a company has left after spending on operations and capital investments. It indicates how much cash is available to repay creditors or return to shareholders through dividends and interest payments.

A total of 127 companies saw their free cash flow increase from a year earlier, while 110 firms reported a decline.

By sector, the technology and electronics industry accounted for the largest increase, generating 29.8 trillion won in free cash flow.

Samsung Electronics, a major global chip and consumer electronics player, posted the largest free cash flow in the third quarter at 19 trillion won, up 42.6 percent on-year. Free cash flow of SK hynix, Samsung's chip competitor, more than doubled to 14 trillion won.

"On the back of a strong chip cycle, Samsung Electronics and SK hynix led the sharp increase in free cash flow in the third quarter," CEO Score said. "It appears that the improved cash flow is translating into higher corporate investment."

Free cash flow of Kia totaled 4.3 trillion won, while that of Korea Gas reached 4 trillion won and HD Hyundai Heavy Industries was at 3.5 trillion won.

In contrast, four major companies, including Hyundai Engineering and Construction, LG Energy Solution and Doosan Enerbility, logged free cash flow deficits of 1 trillion won or more.