After Over Two Years... Hyundai Rotem Returns to Credit Rating 'A'

Management Innovation Achievements Based on Transparent Management

(From the left clockwise) Hyundai Rotem hydrogen electric tram, K2 tank, hydrogen extractor factory 'H2 Equipment Assembly Center'.

[Asia Economy Reporter Jin-ho Kim] Hyundai Rotem has received an upgrade in its credit rating from the three major domestic credit rating agencies based on the achievements of its transparent management activities.

On the 13th, Hyundai Rotem announced that it had been upgraded from BBB+ (positive) to A- (stable) by all three major domestic credit rating agencies: Korea Ratings (Korea Shinpyung), Korea Investors Service (KIS), and NICE Investors Service (NICE). This is the first credit rating upgrade in about two years since 2020.

KIS positively evaluated Hyundai Rotem's efforts to improve its financial structure. As the basis for the credit rating upgrade, it pointed out that Hyundai Rotem has maintained a trend of increasing sales and an operating profit structure since 2020. The key factors included continued sales growth and maintaining a profitable structure through improved efficiency in the railway sector. Hyundai Rotem has recorded nine consecutive quarters of operating profit from the first quarter of 2020 to the first quarter of this year.

Hyundai Rotem cited management innovation as the background for the credit rating upgrade. Since declaring an emergency management system in 2020, Hyundai Rotem has been striving to transform into a "clean company" through transparent management activities. First, it standardized the risk management system. By introducing the Transparent Order Review Committee, it conducted order reviews transparently and preemptively blocked risk factors, thereby standardizing the management system for the entire bidding process and securing transparency. As a result, it succeeded in stabilizing its financial structure and achieving management innovation.

Efforts to strengthen business competitiveness were also pursued simultaneously. Hyundai Rotem carried out customized order activities for each business to expand high-quality orders and undertook fundamental structural improvements across the value chain, including research institutes, procurement, and production, thereby enhancing the competitiveness of its core businesses. The business portfolio was also reorganized with a focus on profitability. Low-profit businesses were streamlined, and the proportion of high value-added businesses such as railway signaling, operations, and maintenance was expanded to establish a stable growth foundation.

The credit rating agencies also gave a positive outlook on Hyundai Rotem's long-term prospects. In particular, all three agencies forecast that Hyundai Rotem will be able to sustain its growth based on its abundant order backlog.

NICE Investors Service evaluated Hyundai Rotem's diversified business structure in railway, defense, and plant sectors as stable. Based on this, it expects Hyundai Rotem to maintain sound profitability by avoiding low-profit businesses, easing fixed cost burdens through sales growth, and expanding high-profit performance. Korea Ratings also gave a positive assessment of Hyundai Rotem's outlook, judging that the full-scale mass production of railway sector order projects will secure financial stability.

Hyundai Rotem plans to respond agilely to future market changes through management innovation based on transparent management. The company intends to pursue long-term growth by building a balanced business portfolio and focusing on future new growth engines in each business sector, including railway, defense, and plant.

As specific new growth engines, there is first the expansion of high-speed train orders and maintenance business in the railway sector. In the defense sector, Hyundai Rotem plans to build a stable growth foundation by expanding tank maintenance business, including the fourth mass production order of the K2 tank. In the plant sector, the company plans to focus on nurturing smart logistics business based on automated equipment.

A Hyundai Rotem official said, “If the favorable business conditions continue, we can expect further credit rating upgrades in the future,” adding, “We will continue to be a trusted company in the market by securing management safety and continuity through transparent management activities.”

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