[Alpha Biz= Kim Jisun] Hyundai Rotem announced on April 20 that its credit rating has been upgraded from ‘A+’ to ‘AA-’ by South Korea’s three major credit rating agencies—Korea Ratings, Korea Investors Service, and NICE Investors Service.

The upgrade reflects improved earnings structure driven by expanding overseas defense exports, along with a favorable outlook for the global defense industry.

The ‘AA’ category is the second-highest among ten credit rating levels, indicating a very strong capacity for debt repayment and a stable earnings and financial structure. The company noted that further upgrades remain possible, particularly with additional export growth in its Defense Solutions division.

According to Korea Investors Service, Hyundai Rotem has secured a solid long-term earnings base supported by a robust order backlog. As of the end of last year, the company held nearly KRW 30 trillion in total orders, marking record highs in both its Rail Solutions and Defense Solutions segments.

The Defense Solutions division alone accounts for KRW 10.5 trillion in backlog, driven by major export contracts in key markets such as Poland and emerging markets including Peru.

Hyundai Rotem also achieved record performance in 2024, surpassing KRW 1 trillion in operating profit for the first time, supported by increased production across its core businesses.

Credit agencies highlighted the company’s diversified business portfolio—spanning rail, defense, and eco-plant sectors—as a key factor in mitigating volatility and strengthening overall stability.

They also pointed to improving global defense demand, particularly in emerging regions such as Latin America and the Middle East, as countries increase military spending amid shifting geopolitical conditions.

Looking ahead, Hyundai Rotem plans to invest more than KRW 1.8 trillion in facilities, unmanned defense systems, and aerospace-related projects. While such investments may increase working capital volatility, agencies expect the company to maintain solid financial stability backed by strong cash flow generation.

NICE Investors Service noted that the company’s adjusted debt ratio remains low when advance payments are considered, and that its cash-generating ability should support both operational and investment needs in the medium term.

Hyundai Rotem’s credit rating has steadily improved in recent years, rising from ‘A0’ in 2023 to ‘A+’ in July 2024, and now to ‘AA-’. The company expects the latest upgrade to enhance its market credibility and reduce financing costs.

The company added that it will continue strengthening governance and risk management systems, including maintaining a transparent order review committee to assess project risks from the bidding stage, while expanding high-quality orders to reinforce competitiveness.

 

 

 

 

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