Moody's revises Posco’s rating outlook to positive

Global credit rating firm Moody‘s upgraded its outlook on steel company Posco’s Baa2 rating from stable to positive, according to the firm Friday.

“The rating actions mainly reflect our expectation that Posco‘s financial profile will continue to improve over the next 1-2 years, underpinned by an increase in earnings and debt reductions,” Gloria Tsuen, a Moody’s vice president and senior analyst, said through a statement.

The ratings firm said that profits from Posco‘s construction business was expected to rebound after seeing losses in 2016, offsetting “the weakness in some domestic end-markets, such as automobile and shipbuilding.”

However, Moody’s said that the rating outlook could be revised again to stable if Posco‘s earnings continue to decline or if the company takes on large-scale investments.

Moody’s revised the outlook on Posco‘s rating from negative to stable last October.

Meanwhile, Moody’s said that Posco‘s rating could be upgraded if the company “improves its financial profile further by enhancing earnings, curtailing investments, and/or implementing substantial deleveraging initiatives, such that adjusted debt/EBITDA stays below 2.7x-2.8x.”

By Won Ho-jung (hjwon@heraldcorp.com)