NICE Investors Service Upgrades Hanwha Ocean Credit Rating

On May 9, NICE Investors Service announced that it has upgraded the long-term credit rating outlook for Hanwha Ocean from Stable to Positive.

On this day, NICE Investors Service explained, "Based on the stabilization of production processes, sales of high-priced vessels are increasing and profitability is improving," as the reason for the upgrade.

NICE Investors Service stated, "Last year, as in the previous year, costs for process stabilization arose due to increased outsourcing expenses and adjustments to production schedules, but these costs decreased in the second half of the year." The agency added, "Since the second quarter of 2023, quarterly sales have continued to increase, indicating that overall production processes are stabilizing."

The agency further noted, "As a result, the proportion of sales from high-priced vessels such as LNG carriers has risen, and the effect of a stronger exchange rate has also contributed, leading to a turnaround to annual operating profit last year." It continued, "In the first quarter of this year, the provisional operating margin is estimated to have improved significantly to 8.2%."

NICE Investors Service expects Hanwha Ocean's performance to continue improving. The agency stated, "Five ongoing offshore projects are scheduled for completion within this year, which is expected to result in a fixed cost burden for the offshore segment afterward." However, it added, "It is analyzed that the proportion of low-margin merchant vessel orders in the backlog has been greatly reduced, so sales growth of high-priced merchant vessels and improvement in operating performance are expected to continue in the short to medium term."

The agency emphasized, "Since last year, orders have increased, centered on LNG carriers and container ships, and by the end of last year, the order backlog reached 30.4 trillion won, securing production volume equivalent to about 2.8 times annual sales." It concluded, "We believe Hanwha Ocean will maintain a stable business foundation in the short to medium term."