27.6% of Listed Companies in South Korea Could Not Even Cover Interest Payments with Operating Profit

[Financial News] More than one in five listed companies in South Korea were unable to even cover interest expenses with operating profit last year, making them "marginal companies." The pace of growth in such firms was also notably faster in South Korea than in other major economies.
The Federation of Korean Industries announced the findings on the 30th after analyzing trends in marginal companies among listed firms in major economies. According to the FKI, South Korea's share of marginal companies stood at 27.6% last year, the second highest among major economies after the United States at 30.7%. South Korea's share rose by 15.8 percentage points, from 11.8% in 2017 to 27.6% in 2025, the fastest increase among the countries surveyed. The increase was also 6.3 percentage points larger than that of the United States, which recorded the second-largest rise. Over the same period, France, the United Kingdom, Germany, and Japan saw much smaller increases than South Korea and the United States.
South Korea also had a high share of companies that were on the verge of becoming marginal firms. Companies with an interest coverage ratio below 1 only in the current year are classified as "temporary marginal companies," and their share in South Korea reached 43.9% last year. That was lower than the United States at 44.0%, but higher than France at 40.1%, the United Kingdom at 36.7%, Germany at 27.0%, and Japan at 9.8%. South Korea's share of temporary marginal companies rose by 13.5 percentage points, from 30.4% in 2017 to 43.9% in 2025. After surging into the 40% range in 2023, it has continued to rise for three consecutive years and has remained above 40%.
In particular, the share of marginal companies in the KOSDAQ market was 32.6%, about twice the 16.7% recorded in the KOSPI market. The share in KOSPI rose by 7.1 percentage points between 2017 and 2025, from 9.6% to 16.7%. By contrast, KOSDAQ saw a 19.5 percentage point increase over the same period, from 13.1% to 32.6%, meaning its rise was about 2.7 times larger than that of KOSPI.
By industry, the highest share of marginal companies was found in arts, sports, and recreation-related services at 60.0%. This was followed by professional, scientific and technical services at 36.8%, wholesale and retail trade at 36.4%, information and communications industry at 32.5%, manufacturing industry at 25.6%, Construction industry at 23.6%, business facility management, business support, and rental services at 21.1%, Education Services Industry at 20.0%, Transportation and Warehousing at 11.1%, and electricity, gas, steam and air conditioning supply at 7.7%.
Lee Sang-ho, head of the Economic Headquarters at FKI, said, "The rapid increase in the share of listed companies in South Korea that are marginal firms suggests that worsening trade conditions, rising costs such as exchange rates, raw materials and labor, and sluggish domestic demand are combining to deteriorate business conditions for key industries excluding semiconductors." He added, "Institutional support should be strengthened to boost corporate vitality and restore competitiveness."



one1@fnnews.com Jung Won-il Reporter