À̹ÌÁö È®´ë SK Innovation"s Ulsan Complex. [Photo by Yonhap]
Shares of SK Innovation Co., South Korea¡¯s oil refining major with electric vehicle battery business, lost ground Wednesday upon a downgrade from global rating agency S&P questioning its short-term business outlook and turnaround in its financial balance.
S&P Global Ratings on Tuesday cut SK Innovation¡¯s issuer credit rating from BBB to BBB- and outstanding debts also a notch from BBB- to BB+, with a negative outlook. Debts are regarded as ¡°speculative¡± from BB+ in the S&P scale and can be further downgraded under the ¡°negative¡± outlook.
Its shares lost 2.19 percent to close at 156,500 won )$141.39) on Wednesday.
S&P pointed to the company¡¯s widening losses as its petrochemicals suffered from poor global demand and battery business yet to turn around. The company is expected to log ¡°significant operating losses in 2020 owing to the drop in crude oil price and weak demand amid COVID-19,¡± while ¡°only a modest recovery¡± will be likely in its 2021 earnings, the agency said in a press release. It projected the profitability pressure coupled with significant investments for EV battery business to result in ¡°much higher debt¡± until next year.
The agency warned of another downgrade if its adjusted debt-to-EBITDA ratio remains over 4.0x without showing signs of ¡°substantial recovery¡± over the next year or two.
The agency also cut its issuer credit rating on SK Innovation¡¯s subsidiary SK Global Chemical Co. to BBB- from BBB because the subsidiary¡¯s ¡°credit quality is tied to that of SK Innovation."
By Pulse
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