S. Korea’s state firms sank deeper into the red in Covid-19 year

2021.05.03 11:32:12 | 2021.05.03 13:35:57

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The red in the bottom line of South Korean state enterprises ballooned in the year of Covid-19 as their elephantine operations took heavy hit from dip in energy output and standstill in travel industry.

According to All Public Information in One (ALIO), a state website offering data on the government and public organizations on Sunday, 11 out of 36 state firms reported net loss last year.

State-owned casino resort Kangwon Land which had to close down and restrict business amid Covid-19 spread suffered the most, incurring a net loss of 275.9 billion won ($246.9 million) in 2020 compared with 334.7 billion won in net profit in 2019.

Grand Korea Leisure, foreigners-only casino registered a net loss of 64.3 billion won last year versus 72.4 billion won profit a year earlier. Other state-owned companies that sank to the red include Korea Racing Authority with a net loss of 436.8 billion won, Jeju Free International City Development Center 128.6 billion, Incheon International Airport Corporation 422.9 billion won, Korea Airports Corporation 148.7 billion won and SR 39.1 billion won.

The Ministry of Economy and Finance said that passenger transport and gambling companies saw their sales plunge due to business restrictions implemented to control the virus spread.

Oil price decline and output cut hurt utility companies. Korea Gas Corporation reported 160.7 billion won in red ink versus 58.3 billion won profit a year ago, Korea South-East Power 144.7 billion won (32.7 billion won profit) and Korea East-West Power 44.2 billion won (141.5 billion won profit). Korea Minting, Security Printing & ID Card Operating Corporation (KOMSCO) swung to 7.9 billion won in net loss in 2020 from 14.6 billion won in net profit in 2019.

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Four money-losing companies saw their deficit widen last year. State-run oil company Korea National Oil Corp. (KNOC) booked its first capital impairment last year due to snowballing losses from failed overseas projects. Net loss of Korea Railroad Corp. swelled to 1.34 trillion won in 2020 from 46.9 billion won in 2019, Korea Resources Corp. 1.35 trillion won from 563.8 billion won and Korea Western Power 85.9 billion won from 46.6 billion won.

Korea Coal Corp. has failed to find breakthrough to escape deepening losses as its plan to secure a management right for its Mongolian subsidiary fell through. The coal mine operator in Mongolia the company set up in 2010 with 25.9 billion won has generated zero profit. Its liabilities exceeded its assets by 32.6 billion won in 2018 since it first fell into complete capital erosion in 2013.

On the back of the growing losses, state-run companies cut their new recruitments last year. A total of 350 public firms newly hired 31,000 in 2020, down from 41,000 a year earlier, marking the first year-over-year cut since 2009 when the country had been suffering from the lingering effect of the global financial crisis. New hiring of state firms had steadily increased from 2010 to 2019.

By Oh Chan-jong, Yang Yeon-ho and Choi Mira

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