[Edaily Marketin LEE GEON-EOM Reporter] Fursys(016800)is once again injecting capital into its Vietnamese subsidiary, which has been plagued by chronic losses. Although the company believed it had put out the immediate fire with a capital increase last year, the scale of losses has spiraled out of control in just over a year, making an additional capital injection inevitable. Given that the Vietnamese business’s competitiveness shows little sign of recovery despite repeated support from Fursys headquarters, observers are characterizing the situation as “pouring water into a bottomless bucket.”

According to the Financial Supervisory Service’s electronic disclosure system on the 11th, Fursys held a board meeting on April 29 and decided to conduct a paid-in capital increase for its Vietnamese subsidiary (FURSYS VN). This marks an additional capital injection just over a year after the board approved a capital increase proposal in February of last year.

Fursys VN, a 3,600 pyeong production base established in Ho Chi Minh City in 2019, serves as a manufacturing and export hub to facilitate the group’s entry into the Southeast Asian market.

Fursys’ continued support for its Vietnamese subsidiary stems from the fact that the local business has not yet achieved competitive footing. Analysts note that, with the global economic downturn coinciding with a slowdown in local market conditions, the subsidiary has been unable to secure its own viability, leading to an entrenched reliance on funding from headquarters.

The deterioration in the Vietnamese subsidiary’s performance is clearly evident in the figures. Fursys Vietnam, a wholly-owned subsidiary, posted a net loss of approximately 1.8 billion won for the first quarter of this year. This represents an increase in the deficit of nearly 18 times compared to the same period last year.

The poor performance of overseas subsidiaries, including the Vietnam subsidiary, is placing a significant burden on Fursys’ consolidated results. On a consolidated basis, Fursys’ first-quarter revenue this year was 97.6 billion won, down 5.8% from 103.7 billion won in the same period last year. Operating profit turned from a 5.1 billion won profit in the same period last year to a 2.1 billion won loss in the first quarter of this year. Cash flow from operating activities also plummeted to 1.2 billion won compared to 8.1 billion won in the same period last year, and free cash flow (FCF) turned from a 6.9 billion won surplus in the same period last year to a deficit of 500 million won in the first quarter of this year.

The problem is that the situation at Fursys’s headquarters is also far from rosy. Fursys’s standalone revenue for the first quarter of this year was 85.6 billion won, a 7.2% decrease compared to the same period last year. Operating profit also amounted to only 400 million won, indicating a continuing chronic slowdown in earnings. This figure represents a sharp 92.4% decline compared to the same period last year.

In effect, analysts are assessing that profits generated from the core business have hit rock bottom. Although net income for the quarter more than doubled from 4.7 billion won to 11.6 billion won through the disposal of financial assets, concerns are mounting because this improvement did not stem from the core business.

When comparing the consolidated and standalone results side by side, the burden posed by overseas subsidiaries becomes even clearer. As recently as the same period last year, standalone operating profit (5.2 billion won) and consolidated operating profit (5.1 billion won) were virtually at the same level. This indicates that the losses from overseas subsidiaries were not significant at that time. In contrast, in the first quarter of this year, while the company maintained a 400 million won profit on a standalone basis, it posted an operating loss of 2.1 billion won on a consolidated basis, marking a shift into the red. The gap between these two figures alone amounts to 2.5 billion won.

The same trend is evident in cash flow. In the same period last year, cash flow from operating activities on both a standalone and consolidated basis stood at around 8.1 billion won, making them virtually identical. In the first quarter of this year, however, the figures were 4.4 billion won on a standalone basis and 1.2 billion won on a consolidated basis, widening the gap to 3.2 billion won.

Free cash flow also turned negative, posting a surplus of 3.4 billion won on a standalone basis but a deficit of 500 million won on a consolidated basis. This has led to analysis suggesting that a significant portion of the cash generated by the parent company is being consumed to prop up its overseas subsidiaries.

Given this situation, some observers suggest that warning signs may be emerging regarding Fursys’s own sustainability. While Fursys’s headquarters remains financially sound, there are concerns that even this stability could be undermined if the slump in its Vietnam operations persists.

Fursys is effectively maintaining a debt-free management structure. As of the first quarter of this year, its cash and cash equivalents on a standalone basis stood at 98.7 billion won, up from 78.3 billion won at the end of last year, and its current ratio—which indicates the ability to repay short-term debt—remains at a very healthy level of 332.3%.

Concerns are emerging that if the company continues to inject funds into underperforming overseas subsidiaries while its core business performance remains weak, even its debt-free stance could be jeopardized. In particular, as the global logistics and furniture markets show signs of a prolonged slowdown, analysts suggest that the company should shift its management focus from providing overseas support for expansion to proactively restructuring underperforming subsidiaries and strengthening its internal foundations.