CEO Score, Analysis of Cumulative Free Cash Flow for 261 Listed Companies in Q3
Among the top 500 domestic companies, the cumulative free cash flow (FCF) of listed companies for the third quarter of this year turned positive, increasing by approximately 42 trillion KRW compared to the previous year. This was largely due to a significant increase in the free cash flow of three companies: Samsung Electronics, Korea Electric Power Corporation, and SK Hynix. Excluding these three companies, the free cash flow of the remaining companies in the third quarter remained negative, similar to the previous year.
On the 4th, CEO Score, a corporate data research institute, investigated the third-quarter individual free cash flow of 261 listed companies among the top 500 domestic companies that could be compared over the past three years. The total cumulative free cash flow of these companies in the third quarter of this year was 39.4335 trillion KRW, an increase of 41.7449 trillion KRW compared to the same period last year (-2.3114 trillion KRW).
Free cash flow is the figure obtained by subtracting capital expenditures from cash flow from operating activities. It is an indicator that shows how healthy a company's actual cash situation is and also serves as a gauge for year-end dividend capacity.
The total cash flow from operating activities of the 261 companies surveyed in the third quarter of this year was 123.0462 trillion KRW, an increase of 50.5% (41.3116 trillion KRW) compared to the same period last year (81.7347 trillion KRW). On the other hand, capital expenditures amounted to 83.6127 trillion KRW, a decrease of 0.5% (4.334 billion KRW) compared to the same period last year (84.0461 trillion KRW). Capital expenditures are costs incurred in the investment process to generate future profits and acquire value, and a decrease in this figure means that companies have reduced their investments.
In the third quarter of this year, 119 companies saw an increase in free cash flow, while 142 companies experienced a decrease. Among the 119 companies with increased free cash flow, 38 companies including Samsung Electronics, Korea Electric Power Corporation, SK Hynix, Hanwha Life Insurance, HMM, and Samsung Fire & Marine Insurance turned their free cash flow positive in the third quarter. Among the 142 companies with decreased free cash flow, 48 companies including Hanwha Aerospace, Samsung SDI, Lotte Insurance, Doosan Enerbility, and Hyundai Steel turned negative.
The increase in free cash flow was concentrated in a few companies. The top three companies in terms of free cash flow increase in the third quarter of this year were Samsung Electronics (21.2246 trillion KRW), Korea Electric Power Corporation (15.1292 trillion KRW), and SK Hynix (10.3177 trillion KRW). The combined increase in free cash flow of these three companies in the third quarter was 46.6715 trillion KRW, which is greater than the total increase in free cash flow of the top 500 companies in the third quarter (41.7449 trillion KRW). In other words, excluding the increase from these three companies, the free cash flow of the remaining top 500 companies remained negative as in the previous year.
Samsung Electronics' free cash flow in the third quarter of this year was 13.346 trillion KRW, successfully turning positive from -7.8785 trillion KRW in the same period last year. Samsung Electronics' free cash flow increased significantly as its cash flow from operating activities rose while capital expenditures decreased by more than 20%. Samsung Electronics' cash flow from operating activities was 41.1828 trillion KRW, up 49.7% (13.6797 trillion KRW) from 27.5031 trillion KRW in the same period last year, and capital expenditures were 27.8368 trillion KRW, down 21.3% (7.5449 trillion KRW) from 35.3816 trillion KRW in the same period last year.
Following Samsung Electronics, Korea Electric Power Corporation, and SK Hynix, Samsung Life Insurance (5.2845 trillion KRW), Hanwha Life Insurance (3.897 trillion KRW), HMM (2.9586 trillion KRW), Samsung Fire & Marine Insurance (2.6741 trillion KRW), Samsung Securities (1.7199 trillion KRW), Hyundai Motor Securities (1.6414 trillion KRW), and HD Hyundai Heavy Industries (1.4593 trillion KRW) ranked among the top 10 companies with the highest increase in free cash flow in the third quarter.
The top three companies with the largest decrease in free cash flow were all in the securities sector. The largest decrease in free cash flow in the third quarter was by Mirae Asset Securities, whose free cash flow was -5.9165 trillion KRW, expanding the negative gap by 3.6693 trillion KRW compared to -2.2472 trillion KRW in the same period last year. Following this, NH Investment & Securities decreased by 2.9411 trillion KRW compared to the previous year, and Kiwoom Securities also decreased by 2.3707 trillion KRW.
Other companies included in the top 10 for the largest decrease in free cash flow were Hanwha Aerospace (2.1129 trillion KRW), Kia (1.9731 trillion KRW), Hyundai Mobis (1.6807 trillion KRW), Samsung SDI (1.6177 trillion KRW), Lotte Insurance (1.4621 trillion KRW), Industrial Bank of Korea (1.4248 trillion KRW), and Samsung Card (1.365 trillion KRW).
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