[Alpha Biz= Kim Jisun] Major South Korean credit rating agencies have collectively revised the outlook for POSCO E&C’s unsecured bonds from “stable” to “negative,” while maintaining the company’s credit rating at A+. The decision reflects concerns over losses stemming from safety incidents, unsold properties, and increasing financial burdens.

According to industry sources on the 28th, Korea Ratings maintained POSCO E&C’s A+ rating but downgraded the outlook to negative on the 26th. The agency projected annual operating losses exceeding KRW 400 billion (approximately USD 300 million).

Jun Hee-Jun, a researcher at Korea Ratings, stated, “Cumulative operating losses of KRW 261.6 billion were recorded for the first three quarters due to penalties and restoration costs at the Shin Ansan Line construction site, bad debt write-offs for unsold regional properties, and additional costs reflected in near-completion overseas projects. In the fourth quarter, further losses of roughly KRW 200 billion are expected due to construction suspensions, unsold properties, and overseas project costs.”

From a business perspective, repeated safety incidents could undermine the company’s core competitiveness. Jun added, “Ongoing safety incidents may continue to negatively affect the reputation of POSCO E&C’s housing brand and disrupt new contract acquisitions, potentially weakening fundamental business competitiveness.”

Yuk Sung-Hoon, a senior researcher at NICE Ratings, noted, “The consecutive major accidents at the Shin Ansan Line site have heightened regulatory risks under the Construction Safety Special Act, which allows fines of up to 3% of revenue. Reputational damage could reduce future contract opportunities, posing a sustained threat to core business competitiveness.”

Financial burden concerns were also raised. POSCO E&C is experiencing significant financial pressure due to delays in recovering operating assets.

Yuk explained, “Prolonged sluggishness in regional real estate sales negatively impacts the recovery of operating assets such as construction receivables and loans. Delays in working capital recovery and construction suspensions are further deepening operating cash flow deficits.”

Experts warn that urgent financial restructuring is needed for POSCO E&C to maintain its credit rating. Chan-Bo Park, a senior researcher at Korea Investors Service, stated, “If administrative measures such as business suspension and restrictions on public bidding materialize, the company’s contract competitiveness will inevitably decline. We will continue to monitor the implementation of safety-related administrative measures and financial restructuring plans.”

 

 

 

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