[Alpha Biz=(Chicago) Reporter Kim Jisun] Hyosung Chemical's financial soundness has been shaking significantly this year, with its debt ratio soaring to about 10,000%. Domestic credit rating agencies are also lowering Hyosung Chemical's creditworthiness one after another.

According to the industry on the 13th, domestic credit rating agencies recently lowered Hyosung Chemical's credit rating from 'A' to 'A-'. This is the first time Hyosung Chemical's credit rating has fallen to the "A-" level.

The Korea Credit Rating lowered the credit rating from "A" to "A-stable" on the 8th, saying Hyosung Chemical's profit-generating power and financial structure have declined. Earlier on the 5th, Nice Credit Ratings lowered Hyosung Chemical's credit rating from "A (negative)" to "A- (positive)."

In fact, Hyosung Chemical continues to suffer massive operating losses and its debt ratio is soaring. At the end of last year, the company recorded an operating loss of 336.7 billion won on an annual consolidated basis, and continued its operating loss of 45.3 billion won in the first quarter of this year. The debt ratio stood at 2,632% as of the end of last year, soaring to 9,959% in three months as of the end of the first quarter of this year. This is about 20 times higher than the debt ratio of 509% at the end of 2021.

Since the spread of the COVID-19, sluggish sales and rising raw material prices have hampered earnings due to a slowdown in the global polypropylene (PP) industry. In addition, the deficit increased due to the poor performance of the newly established Vietnamese corporation in 2018.

In particular, the expansion of investment and continued poor performance due to the establishment of a local plant by a Vietnamese corporation are putting pressure on Hyosung Chemical. The polypropylene (PP) plant in Vietnam, which invested 1.5 trillion won, has been in the red due to continued facility problems and the COVID-19 crisis. The net loss of the Vietnamese corporation expanded to 313.7 billion won last year, following 54.4 billion won in 2020 and 60.5 billion won in 2021, and its total capital has been completely eroded to -71.5 billion won as of the end of March.

Hyosung Chemical decided to invest an additional 159.7 billion won through a paid-in capital increase last month to normalize its Vietnamese subsidiary, which has been mired in capital erosion. The existing loan of 133.1 billion won will also be converted into investment.

 

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