[At a Crossroads] Parkers① 5 Years of Deficits and Ventilation Designation... Q1 Also 'Shaky'

Q1 Operating Loss of 800 Million KRW, Continued Deficit in LED Business
Debt Ratio Increase... Deterioration of Financial Structure

Parkers, a KOSDAQ-listed company designated as an ‘Investment Warning Stock’ after recording losses for five consecutive years, posted a loss again in the first quarter of this year.

According to the Financial Supervisory Service’s electronic disclosure system on the 4th, Parkers reported consolidated sales of 17.1 billion KRW and an operating loss of 800 million KRW in the first quarter of this year. Compared to the same period last year, sales slightly decreased, but the operating loss was reduced by about 2.9 billion KRW.

In detail, although sales decreased, the purchase amount of raw materials and components increased by 17% compared to the same period last year. On the other hand, advertising expenses, which were about 3 billion KRW last year, were reduced to around 600 million KRW, helping to alleviate the operating loss.

Parkers, established in 1970, is a manufacturer of printer parts and light-emitting diode (LED) lighting. As of the end of last year, the sales composition was 81.5% from printer parts and 17.3% from LED. The LED division also operates an infrared medical device business. The company runs a beauty device subsidiary called ‘Allok’. The printer division recorded an operating profit of 35 million KRW in the first quarter, while the LED division posted an operating loss of 1 billion KRW.

Printer parts and other products are manufactured at its Chinese subsidiaries. Parkers holds 100% of the shares of DAEJIN DPS LIMITED through its Korean subsidiary Parkers Mega Factory, which owns two Chinese subsidiaries: Weihai Daejin Electronics Co., Ltd. and Weihai Arcadis Co., Ltd.

Parkers has loaned 19.8 billion KRW to DAEJIN DPS. On the 29th of last month, it extended the maturity of part of the loan to support the operating funds of the Chinese subsidiaries. The interest rate is 0%. Of this loan, 2.3 billion KRW has been set aside as an allowance for doubtful accounts.

Although the printer business recorded a slight operating profit in the first quarter, it has continued to incur losses over recent years. Last year, the printer division posted an operating loss of 1.8 billion KRW and a net loss of 11.5 billion KRW. In 2022, it recorded an operating loss of 6.6 billion KRW and a net loss of 4.8 billion KRW.

The LED division, which has a smaller total sales scale than the printer division, suffered even larger losses. Last year, the LED division recorded an operating loss of 8.3 billion KRW and a net loss of 5.4 billion KRW. In 2022, both operating and net losses were 8.6 billion KRW each.

Due to continuous losses every year, Parkers was designated as an ‘Investment Warning Stock’ by the Korea Exchange at the beginning of this year. According to KOSDAQ regulations, companies that record operating losses for five consecutive years under separate criteria are designated as Investment Warning Stocks. Until 2022, companies with five consecutive years of losses were subject to a delisting review.

Although the regulation change has temporarily spared Parkers from delisting, its financial structure is gradually deteriorating due to ongoing losses. As of the end of the first quarter, Parkers’ debt ratio stood at 148.1%, up 26.3% from the same period last year. Total borrowings amount to 58.1 billion KRW, and net borrowings, excluding cash and cash equivalents of 16 billion KRW, reach 42.1 billion KRW.