S&P shifts Hyundai Steel view to negative

S&P said it revised the outlook on Hyundai Steel Co. to negative from stable and affirmed its BBB long-term issuer credit rating.

“We revised the outlook on Hyundai Steel to negative to reflect the weakening fundamentals in the steel industry, which is likely to affect the company's operating performance over the next 12-24 months. We also considered Hyundai Steel's rising leverage (debt-to-EBITDA ratio),” said S&P in a press release.

The lag in the rise in steel prices following a spike in iron ore prices in the first half of 2019 is likely to lower the company's EBITDA to about KRW 2.2 trillion in 2020, below the company's peak earnings of KRW 2.6 trillion–KRW 2.8 trillion in 2017-2018. Hyundai Steel reported a KRW 140 billion operating loss in the fourth quarter of 2019 as weak operating conditions squeezed margins, S&P said.

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