Moody's Upgrades Samsung Electronics Corporate Credit Rating to Aa2

Samsung Electronics Seocho Building. / Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Choi Dae-yeol] International credit rating agency Moody's announced on the 1st that it has upgraded Samsung Electronics' corporate credit rating from 'Aa3' to 'Aa2'. The rating outlook remains 'stable.'

Moody's stated, "This reflects Samsung Electronics' excellent technological and commercial competitiveness, holding leading market positions in multiple sectors such as memory semiconductors, display panels, mobile, and home appliances," adding, "In particular, the clear leading position in the memory semiconductor sector, which accounts for a significant portion of profits and cash flow and is expected to see positive demand growth in the long term, is a key factor supporting the credit rating."

It also added, "We reflected Samsung Electronics' proven ability to generate free cash flow despite cyclical fluctuations in the industry and its very strong financial buffer, as evidenced by the large net cash holdings of 108 trillion won as of the end of June."

Moody's forecasted, "Samsung Electronics' annual adjusted operating profit for 2022?2023 will decrease to 45 trillion to 50 trillion won compared to last year's 52 trillion won," but added, "It will maintain solid profitability, recording an adjusted profit margin of about 16% during this period." Furthermore, it predicted, "The company's profit growth will resume, supported by reduced investment for facility expansion and the continued structural growth in memory semiconductor demand due to additional expansion of data usage and storage capacity."

The stable rating outlook is based on expectations that over the next one to one and a half years, Samsung Electronics will maintain technological and commercial leadership in its major business sectors, generate free cash flow, and uphold a conservative financial policy.

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