Nearly 1 out of 4 major companies in South Korea were unable to cover interest payments with their earnings in 2014 despite cheaper borrowing costs, data showed Monday.
  

Thirty-seven firms, or 23.6 percent, out of 167 companies that logged annual sales of 1 trillion won ($915 million) or more reported an interest coverage ratio of below 1 last year, according to Chaebul.com, which tracks the nation's top conglomerates.
  

The ratio, or a firm's operating profit divided by its interest costs, measures the company's ability to pay interest on outstanding debt. A reading higher than 1 means the firm earns more than what it has to pay in interest, while a drop in the reading indicates the firm's debt-repayment ability has deteriorated.
  

Although South Korea's central bank cut interest rates twice last year, the portion of large firms with the ratio below 1 increased from 21.7 percent in 2013 due to slumping earnings by local refiners and shipbuilders.
  

The interest coverage ratio of Hyundai Heavy Industries, the world's largest shipbuilder that logged 1.92 trillion won in operating loss, stood at minus 22.4 last year, and the corresponding figure for its affiliate Hyundai Mipo Dockyard Co. plunged to minus 97.3, data showed.
  

No. 3 refiner S-Oil Co. logged the interest coverage ratio of minus 6.8 as it turned to operating deficit for the first time in nearly three decades due to a plunge in oil prices.
  

Airlines had an interest coverage ratio below 1, but their debt-servicing capacity improved sharply as cheaper oil prices enhanced their revenue by lowering fuel costs.
  

Korean Air Lines Co., the nation's biggest air carrier, improved the ratio to 0.9 in 2014, up from zero a year ago, and that for smaller rival Asiana Airlines Co. rebounded from minus 0.5 to 0.3 over the period, data noted. (Yonhap)