September 24, 2020 13:01
Moody's has warned Korean conglomerates of possible cuts in their credit ratings.
The credit ratings firm on Wednesday said 15 of 26 non-financial companies in Korea posted weak earnings in the first half of this year.
"Given the ongoing difficult operating conditions, negative rating actions will likely outnumber positive ones over the next 12 months," it said. "In particular, companies in cyclical sectors such as refining, chemical, steel and auto were more strongly impacted, with many reporting weaker profitability because of lower sales volumes or narrowing product spreads," it added.
It said the key to economic recovery lies in how effectively Korea overcomes the impact of the coronavirus epidemic, but prospects remain uncertain in the absence of a vaccine.
The companies include Samsung and Hyundai. Thirteen were given "negative" and nine "stable" forecasts but none a "positive" outlook. A negative outlook means there is a high chance of a credit ratings decline within the next two years.
In the first half of this year, Moody's either slashed the rating or lowered the outlook for 10 companies in Korea, including SK Innovation, LG Chem and E-Mart.
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