Nice Credit Rating "Hyundai Rotem Long- and Short-Term Credit Ratings Downgraded"

[Asia Economy Reporter Minji Lee] NICE Credit Rating downgraded Hyundai Rotem's long-term credit rating from 'A-/Negative' to 'BBB+/Stable' and its short-term credit rating from 'A2-' to 'A3+' on the 30th.

NICE Credit Rating explained, "The main reason for the downgrade is that the financial structure significantly deteriorated due to large-scale losses in 2019, and we believe that improvement in financial stability based on mid- to short-term operating cash flow will be limited due to weakened profit-generating capacity and working capital burdens."

Last year, the company recorded a large operating loss of 259.5 billion KRW in its core railway business due to additional costs from design changes in numerous domestic and overseas projects, revenue recognition from low-priced projects, and delay penalties caused by schedule delays. Additionally, the plant division recorded an operating loss of 39.1 billion KRW due to additional provisions arising from delayed delivery in the Qatar sewage treatment project. As a result, the debt ratio at the end of last year was 362.6%, significantly higher than the 2018 debt ratio of 261.2%, indicating a substantial deterioration in the financial structure.