Seven out of 10 top financial executives at Korean conglomerates believe balance sheets next year would worsen from this year amid bleak business prospects and higher borrowing cost.
In a survey recently conducted by Maeil Business Newspaper inquiring 49 chief financial officers (CFOs) at Korea’s large-sized enterprises on the financial outlook for next year, 69.4 percent of the respondents were pessimistic about next year’s financial conditions. Another 29 percent predicted to keep up the status quo as this year. Just one was hopeful for a better year in 2017.
The main cause was worsening performance (46.3 percent), followed by higher interest rates (38.9 percent). Companies could find themselves in a liquidity squeeze when interest cost rises while business remains slow.
Some 63.3 percent predicted their companies would further lose debt creditworthiness, which would make it harder for them to raise new funds and further worsen their balance sheets.
By Hong Jang-won and Yoon Jin-ho
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]