Hyosung Chemical’s credit rating downgraded one notch

Korea Investors Service downgraded the unsecured bond credit rating of Hyosung Chemical on Thursday from A to A-, saying that its profit-generating ability and financial structure had deteriorated.  

The company's commercial paper credit rating was also downgraded from A2 to A2-. 

“Hyosung Chemical has been in a quarterly operating loss since the fourth quarter of 2021 due to rising raw material costs in response to a drop in selling prices and delays in stabilizing new facilities in Vietnam,” the credit rating agency said in a report. 

Hyosung Chemical posted a total operating loss of 336.7 billion won ($258.5 million) on a consolidated basis last year. It was analyzed that it would take time to improve the financial structure. 

Hyosung Chemical's net debt on a consolidated basis increased from 903.4 billion won in 2018 to 2.52 trillion won as of the end of March this year because of the burden of large-scale facility investment.

"Due to the slowdown in the polypropylene (PP) industry and the sluggish performance of the Vietnamese subsidiary, operating losses are occurring, and debt coverage and financial stability indicators are significantly declining," commented Korea Investors Service.

Write to Hyun-Ju Jang at blacksea@hankyung.com