Nashinpyung "HiteJinro and Lotte Chilsung Beverage Credit Ratings Maintained"

[Asia Economy Reporter Minji Lee] NICE Credit Rating announced on the 12th that it maintained the credit ratings and rating outlooks of HiteJinro and Lotte Chilsung Beverage through the regular mid-year evaluation. HiteJinro's long- and short-term credit ratings are A (stable) and A2, respectively, while Lotte Chilsung Beverage's are AA (stable) and A1.

[Image source=Yonhap News]

The liquor industry saw a significant decline in sales through dining-out channels, which account for about 50% of soju and beer sales, due to the spread of the novel coronavirus disease (COVID-19).

Hyungdae Han, a researcher at NICE Credit Rating's Corporate Evaluation Division, stated, "At the beginning of this year, the liquor industry expected an improved business environment due to enhanced price competitiveness of domestic beer following the transition to a beer volume tax system and reduced rebate-related costs through amendments to liquor regulations, but sales volume sharply declined due to COVID-19."

Reviewing the first-quarter performance, the direction of corporate results varied due to changes in market share by beverage type. HiteJinro successfully launched 'Terra' and 'Jinro Is Back' in the first half of this year, significantly increasing its market share. Sales in the home-use channel also rose, leading to performance improvements in both the soju and beer segments.

Conversely, Lotte Chilsung Beverage's liquor division experienced a decline in market share in the second half of last year due to a boycott movement, and sales in the commercial-use channel also decreased, resulting in notably poor first-quarter performance.

Although it does not have a valid rating, OB Beer, the market leader in the beer segment, saw its sales and operating profit decrease by 9% and 25%, respectively, compared to the previous year, and its first-quarter performance is also estimated to have deteriorated.

Researcher Hyungdae Han explained, "Lotte Chilsung Beverage's future credit rating will reflect profitability depending on whether losses in the liquor division are reduced, the scale of operating profit before depreciation, and the level of changes in borrowings due to facilities and equity investments. For HiteJinro, factors such as the competitive situation in the beer segment and changes in debt repayment capacity will be considered."

This content was produced with the assistance of AI translation services.