NICE Investors Service said on the 12th it lowered the outlook on Daewoo Engineering & Construction's long-term credit rating to "negative" from "stable."
In a report that day, the agency explained it reflected large losses tied to uncollected receivables at domestic sites and additional cost increases at overseas sites last year.
Earlier, Daewoo Engineering & Construction said that on a consolidation basis last year it posted revenue of 8.0546 trillion won, an operating loss of 815.4 billion won, and a net loss of 916.1 billion won. The company said losses swelled mainly due to unsold homes in provincial areas and rising site costs.
Regarding this, the agency noted, "The main causes of the large loss appear to be about 595 billion won in bad-debt expenses related to domestic unsold apartments and income-producing real estate sites, and about 669.4 billion won in expected additional costs in the overseas segment."
It added, "With the large losses reflected, capital on a preliminary basis is estimated to shrink from 4.3 trillion won at the end of 2024 to 3.5 trillion won at the end of 2025, while the debt ratio is seen rising from 192.1% to 284.5% over the same period, indicating a significant materialization of weaker financial soundness."
It also assessed, "While this 'big bath' (a one-off recognition of accumulated losses) has eased some potential loss factors, improvement in the financial structure will take time given that net debt remains burdensome and capital buffers have weakened."