Nice Investors Service Downgrades SKC Credit Rating to A

Nice Investors Service announced on December 24 that it has downgraded SKC's unsecured bond credit rating from A+ to A and assigned a stable outlook. The short-term credit rating was also lowered from A2+ to A2.

Nice Investors Service stated that SKC continues to report operating losses due to a downturn in the industry, and that a rapid recovery is unlikely in the short term. "SKC posted a cumulative operating loss of approximately 500 billion won from 2023 to 2024, and a cumulative operating loss of 197.4 billion won as of the third quarter of 2025," the agency said. "Given the sluggish industry conditions and initial costs related to the operation of the remaining plant in Malaysia, losses are expected to continue through 2026."

The agency also predicted that it will take time for SKC to restore its debt repayment capacity, considering the weakened operating cash flow. "SKC is reviewing various measures to reduce its debt burden, and discussions on business portfolio rebalancing are also underway at the SK Group level," the agency noted. "However, given the diminished operating cash flow, it is expected to take a considerable period for SKC to meaningfully alleviate its increased financial burden and significantly improve its debt repayment capacity," it emphasized.

Nice Investors Service cited the improvement of profitability in key business divisions such as petrochemicals and copper foil as a major point of focus. "Among the products in the petrochemical segment, PG maintains strong profitability, but PO and SM are unlikely to see a recovery in market conditions due to accumulated capacity expansions in the region," the agency explained. "Given the heightened competitive intensity and the potential for policy changes in major electric vehicle markets such as North America and Europe, there remains significant uncertainty regarding the timing of a meaningful recovery in profitability," it added.