NICE Investors Service Downgrades Lotte Aluminium's Short-Term Credit Rating from A2+ to A2

"Performance Decline Due to the Chasm...
Low Profitability Expected to Continue"

On June 25, NICE Investors Service announced that it had downgraded Lotte Aluminium's short-term credit rating from 'A2+' to 'A2'.

In its report released on the same day, NICE Investors Service stated, "Business performance has deteriorated due to decreased demand for cathode foil caused by the temporary demand stagnation in the electric vehicle sector, as well as low yield rates at new overseas plants. We expect low levels of operating profitability to persist."

In particular, it noted, "In 2024, the Hungarian subsidiary continued to post operating losses (KRW 30.3 billion), and operating profitability dropped significantly (consolidated EBIT margin of -7.4%) due to the establishment of provisions related to the ordinary wage lawsuit (KRW 15.3 billion)."

It also added, "Cash flow has been constrained due to weakened cash generation capability and capital requirements related to investments in overseas production facilities, which has led to a decline in financial stability."

NICE Investors Service pointed out, "The company's cash generation capability, including EBITDA (earnings before interest, taxes, depreciation, and amortization), has weakened significantly due to the decline in operating profitability. At the same time, capital requirements related to investments in overseas subsidiaries and non-recurring CAPEX (capital expenditures) continue to persist."

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