POSCO Holdings, S&P Credit Rating Upgraded to 'A-' for the First Time in 10 Years

S&P "Strong Market Dominance in Korean Steel Market"
Newly Established Steel Business Corporation POSCO Assigned 'A-' Rating

[Asia Economy Reporter Donghoon Jeong] POSCO Holdings' corporate credit rating has risen to 'A-' for the first time in 10 years.

On the 28th, the international credit rating agency Standard & Poor's (S&P) upgraded POSCO Holdings' credit rating from 'BBB+' to 'A-' for the first time since 2012, a 10-year interval.

S&P analyzed that although POSCO Holdings' performance is expected to decline somewhat due to the global economic slowdown and weakening steel demand, the high proportion of high value-added products in its product mix and its strong market dominance in Korea sufficiently offset these factors. They also stated that EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is expected to be around 8 to 11 trillion KRW this year and next year.

Regarding the adjusted debt-to-EBITDA ratio, it significantly improved from 1.5 times in 2020 to 0.7 times in 2021, and it is forecasted to maintain a level between 0.8 and 1.4 times over the next 24 months.

Furthermore, S&P evaluated that investments in new growth businesses POSCO Holdings is pursuing, such as secondary battery materials and hydrogen business, can be sufficiently financed internally, and presented a 'Stable' outlook for the rating going forward.

On the same day, S&P also assigned a credit rating of 'A-' for POSCO, the steel business company newly established in March. The basis for granting the 'A-' rating is that POSCO still contributes significantly to the POSCO Group's performance and continues to play an important role in the group's strategy. It is also expected to maintain an adjusted debt-to-EBITDA ratio of 0.4 to 0.8 times over the next two years. Additionally, POSCO's EBITDA margin was evaluated as the highest and most stable among global steel companies.

Last year, POSCO Holdings achieved record-high consolidated sales of 76.3323 trillion KRW and operating profit of 9.2381 trillion KRW since its founding in 1968, driven by ▲ expanded domestic and high value-added product sales in the steel sector, improved profits of overseas steel subsidiaries ▲ strong performance of POSCO International's trading and investment subsidiaries in eco-friendly infrastructure, including eco-friendly vehicle drive motor business ▲ and record sales and operating profit from POSCO Chemical’s full-scale mass production of cathode materials in the new growth sector.

Meanwhile, POSCO Group decided to transition to a holding company system to survive in an era of uncertainty and lay the foundation for becoming a 100-year company, launching POSCO Holdings in March. After the transition, the growth vision is to become a "global business leader leading humanity's sustainable future," aiming to realize five goals: completing steel carbon neutrality, driving mobility, leading green energy, realizing future housing, and securing global food resources. To achieve this, the group plans to strengthen competitiveness in seven core businesses: steel, secondary battery materials, lithium and nickel, hydrogen, energy, construction and infrastructure, and food.