South Korean e-commerce company Coupang saw its largest-ever operating loss last year, raising questions about whether the fast-growing online retailer would have the ammunition to fuel its aggressive expansion plans let alone sustain its business.

According to the company’s regulatory filing on Monday, it posted an operating loss of 638.8 billion won ($597 million) in 2017, widening 13 percent from a year earlier. Sales expanded 40.1 percent to 2.68 trillion won, but the revenue rise was not enough to offset the company’s massive investment in infrastructure and burgeoning logistics management costs.

With 2015 and 2016 losses averaging 550 billion won a year, it has racked up losses of nearly 1.75 trillion won over the past three years, overshadowing the 1.55 trillion won investment it had drawn from Japanese conglomerate SoftBank and U.S. private equity funds.

Mounting losses have already eaten into the capital base of the unlisted company. The 318.1 billion won left on its balance was wiped out last year. Deficit has reached 1.88 trillion won. Its total liabilities last year doubled to 1.33 trillion won on year.

Coupang explained the costs are necessary investment to build up infrastructure and logistics to move onto the next stage of growth and denied it was in a liquidity crisis.

“Though we are in an impaired capital state, liquidity is not an issue as we currently hold cash and equivalents of 813 billion won,” said a Coupang official.

Coupang said part of its cash reserves comes from the 510 billion won raised through the issuance of new shares through its U.S. entity this year, and the rest is 303 billion won in cash and short-term assets as of late 2017.

Coupang commands the largest share in e-commerce following its aggressive expansion over the last few years.

By Baek Sang-kyung and Kim Hyo-jin

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]