[News Space=Reporter seungwon lee] Although Incruit (CEO Seo Mi-young) recorded positive results last year, such as a slight increase in sales and a turnaround in operating profit, the company's financial structure remains seriously instable, with a sharp increase in debt ratio and deterioration in cash flow. 

The company's fundamentals have improved with its operating profit turning to black, but its major weakness is its excessive dependence on debt, and it urgently needs to strengthen its financial soundness. In addition, this year, the restructuring of short-term debt and the expansion of platform business performance are expected to determine its success or failure.

According to the audit report of the Financial Supervisory Service's electronic disclosure system on the 9th, Incruit's sales in 2024 increased by 2.8% to 34.3 billion won compared to 33.38 billion won the previous year. Operating profit turned from a deficit of 1.49 billion won the previous year to a surplus of 50.28 million won. However, net profit still recorded a deficit of 263 million won. However, it improved by about 1 billion won compared to the previous year's net loss of 1.212 billion won.

Total assets were 25.55 billion won (21.62 billion won the previous year), the current ratio was 73.9%, and the debt ratio was 898%. The debt ratio was much higher than the previous year's 611%. In other words, the debt increased excessively compared to capital, deteriorating financial stability.

Cash flow from operating activities is also minus 7.6 billion won, and short-term borrowings also increased from 8.34 billion won the previous year to 11.88 billion won. Long-term borrowings were identified as 2.68 billion won. The total borrowings are 14.56 billion won, which is 63.3% of total debt. The borrowers of short-term borrowings are the Industrial Bank of Korea (5 billion won), Kookmin Bank (2 billion won), and IM Bank (1.5 billion won).

A corporate finance analysis expert analyzed, "There are concerns about short-term funding pressure due to the decline in the distribution ratio and increase in short-term borrowings," and "In addition, since cash flow from operating activities is negative and cash generation is not being done, it is expected to be difficult to secure continuous operating funds."

Defined benefit liabilities, which reflect long-term salary obligations such as retirement benefits that must be paid to employees, have also increased compared to the previous year, making retirement benefits a burden. 

In addition, since overdue accounts receivable for more than one year account for 4.7% of all accounts receivable, additional collection efforts appear necessary.

A corporate finance analysis expert advised, “Incruit should strengthen the collection of overdue accounts receivable, maintain an appropriate amount of bad debt reserves, and continue to manage credit risk,” and “It seems necessary to take measures such as expanding external reserve assets or setting conservative actuarial assumptions to ease the long-term financial burden related to retirement benefits.”

The ongoing litigation (1 case, litigation amount 12 million won) does not have a significant financial impact, but could act as a potential risk.

Despite positive signs of sales growth and operating profit turnaround, Incruit's high debt ratio and weakened liquidity remain as major challenges. The company's future short-term debt repayment plan and platform business expansion strategy are expected to be key factors in determining its success.

In 2023, Incruit paid a special dividend of 7 billion won to its parent company, Incruit & Co., despite its deficit. This is an unusual dividend paid in a financially difficult situation, and shows the close flow of funds between the parent company and its subsidiary. 

Transactions with parent company Incruit & Co. account for the main portion, and cash flow occurs in various forms such as sales and loan interest income. In 2024, sales to Incruit & Co. were estimated at approximately KRW 700 million, and loan interest income was estimated at approximately KRW 360 million.

No dividends were paid in 2024.

A corporate finance analysis expert said, "Incruit is growing based on its close relationship with its parent company, Incruit & Co., but unusual decisions such as special dividends involve financial risks." He added, "Improving the governance structure and strengthening independent business operations are expected to be key tasks to increase the company's sustainability in the future."

A total of 520 million won was paid to key executives in short-term salaries, retirement pay, and stock compensation, a 45% increase from the previous year's 360 million won.

34.3 billion won was spent on operating expenses, of which 10.2 billion won was spent on salaries, 18.2 billion won on commissions, and 1.13 billion won on advertising and publicity expenses.

Meanwhile, Incruit is Korea's first job portal founded in 1998, and is a company that provides recruitment consulting and platform services. Currently, Incruit is operated as a wholly owned subsidiary of Incruit & Co., Ltd.