Korea Ratings: POSCO International Credit Rating Outlook Raised from "Stable" to "Positive"

Korea Ratings announced on August 29 that it has changed the outlook for POSCO International’s unsecured bond rating from “Stable” to “Positive.”

One of the reasons cited for the outlook revision was the mitigation of earnings volatility. Korea Ratings stated, “With the addition of the highly profitable LNG terminal business, the level of business portfolio diversification has been further enhanced. Annual sales now exceed 30 trillion won and operating profit surpasses 1 trillion won, and the complementary performance among business segments has helped reduce the volatility in operating profit compared to the past.”

The agency also expects to see continued growth in profit generation through increased gas field production and LNG terminal expansion. Korea Ratings explained that, thanks to favorable resource and raw material prices and diversification of revenue streams, POSCO International has consistently generated annual operating profit exceeding 1 trillion won since 2023.

They added, “Looking ahead, the company is expected to see profit growth centered on the energy sector, driven by increased production at the SENEX gas field in Australia and the expansion of LNG terminals.”

Furthermore, Korea Ratings emphasized, “We expect POSCO International to maintain a certain level of profit generation, supported by a stable margin structure for diversified regional portfolio captive volumes, a high proportion of high value-added products such as specialty steel, and favorable palm oil market conditions.”

Despite the burden of capital expenditures (CAPEX), the agency expects POSCO International to maintain strong financial stability through robust operating cash flow and the sale of non-core assets. Korea Ratings noted, “As of the end of June this year, the company’s consolidated debt ratio stood at 133.2% and its reliance on borrowings at 36%, reflecting a stable financial structure. Even with annual CAPEX requirements of around 1 trillion won, we expect the company to maintain excellent financial stability based on stable operating cash flow and the sale of non-core assets.”