[Alpha Biz= Reporter Kim Jisun] A domestic credit rating agency has downgraded the credit ratings of Hanwha TotalEnergies and Yeochun NCC.

According to the petrochemical industry on the 23rd, Korea Ratings (Korea Ratings Corporation) downgraded the credit rating outlook for Hanwha TotalEnergies from 'AA (Negative)' to 'AA- (Stable)' on the 21st. Hanwha TotalEnergies is a comprehensive petrochemical company with facilities for naphtha cracking (NCC) and products in the benzene, toluene, and xylene (BTX) categories.

This adjustment is attributed to the impact of the downturn in the petrochemical industry, which has weakened its ability to generate operating cash flow. On a separate financial statement basis, it recorded an operating profit of 220.6 billion won in 2022, but last year it turned to an operating loss of 5.8 billion won.

Hanwha TotalEnergies' EBITA margin slightly recovered from 4.1% at the end of December last year to 5.8% at the end of March this year, based on separate financial statements.

On the same day, the credit rating outlook for Yeochun NCC was also downgraded from 'A (Stable)' to 'A (Negative).' This marks a consecutive downgrade following the regular evaluation last year. The accumulated operating losses are cited as the influencing factor. Yeochun NCC has recorded deficits for 10 consecutive quarters from the fourth quarter of 2021 to the first quarter of this year. It posted operating losses of 386.7 billion won and 238.8 billion won in 2022 and last year, respectively. In the first quarter of this year, it recorded a loss of 34.7 billion won.

Credit rating agencies are generally lowering the credit ratings across the petrochemical industry. Last month, Korea Investors Service downgraded Yeochun NCC's credit rating from 'A (Stable)' to 'A (Negative)' and also lowered SK picglobal's credit rating from A to A-.

NICE Investors Service also downgraded the rating outlook for Hyosung Chemical from Stable to Negative.

 

 

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