Twenty out of 30 Korean companies are suffering from a serious cash flow problem this year, a survey found yesterday.

The Chaebul.com survey of major companies showed that two-thirds of the respondents saw a decrease in cash flow from operating activities this year when compared to the first half of 2007.

Operating cash flow is the amount of cash generated from a company's revenue, excluding costs tied to long-term investment on capital items or investment in securities.

Experts said a squeeze in operating cash flow weakens a companies' ability to secure raw materials, invest in marketing and advertising, as well extend the due dates for loan payments. The precarious situation also erodes wages and dividends.

Three affiliated companies of Daelim Group, including Daelim Industrial Co., a major builder, reported a loss of 863.2 billion won ($593.3 million) due to a cash flow shortage more than 10 times bigger than that of last year's. The three companies said it saw a loss of 96 billion won in the first half of 2007.

Daelim reported the biggest loss among 30 other companies that participated in the survey, the report said.

As of June this year, the group had a total of 7.68 trillion won of assets but has only 69.4 billion won of cash assets.

The Kumho Asiana Group and its affiliates such as Kumho Industries and Kumho Tire reported a loss of 225.6 billion won due to a cash flow problem. The loss reported for the first half of this year is five times heavier than that of last year's, the survey added.

The nation's second-tier conglomerates such as Doosan, Tongyang and Dongbu Group have also been struggling with a capital shortage, the report said.

Dongbu and its five affiliated companies saw 218.7 billion won in losses from operating cash flow while Doosan and Tongyang saw 78.9 billion and 54.7 billion losses.

The key task for the management of the conglomerates will be to improve their liquidity conditions through selling off their assets and reducing costs, experts said.

Another report found that the nation's IPO market is the weakest since 2003 due to the massive plunge in the KOSPI.

According to a consulting company here, the size of the country's IPO market is estimated at 702 billion won, a 44.59 per cent decrease from 1.26 trillion won last year.