[Edaily Marketin, Reporter Lee Geon-eom] #Korea Ratings (KR) announced on the 17th that it had downgraded #Clean Nation’s unsecured corporate bonds and corporate credit rating (ICR) from “BBB (Negative)” to “BBB- (Stable).” The credit ratings for commercial paper and electronic short-term bonds were also lowered from “A3” to “A3-.” The downgrade was primarily driven by a widening operating loss due to slowing demand for key products, compounded by a significant increase in financial burdens resulting from large-scale facility investments.

Korea Ratings cited the following as the main factors behind the downgrade of Clean Nation’s credit rating: △widening operating losses due to sluggish sales and rising major cost burdens; △persistent excessive financial burdens resulting from expanded investments; △deteriorating financial stability due to large-scale losses and debt financing; and △limited potential for improvement in operating profitability in the medium to short term.

Jo Hyun-sung, a senior researcher at Han Ki-pyeong, stated, “While the HL (Home and Life) division performed well amid fierce competition thanks to strong sales of sanitary napkins, the PS (Paper Solution) division’s sales plummeted by 11.1% year-over-year due to the economic slowdown and the ripple effects of oversupply from global manufacturers such as those in China, leading to a decline in overall performance.” “Compounded by shrinking margins due to price cuts and the suspension of operations at a production line (Line 2), the company recorded a massive operating loss of 22.6 billion won last year,” he added.

In fact, Clean Nation’s financial indicators are rapidly deteriorating. Although the company sought to bolster its capital by issuing 300억 won worth of hybrid capital securities in April 2025, its leverage ratios actually worsened due to the expansion of massive accumulated losses and the need to borrow funds to cover shortfalls.

As of the end of 2025, the debt-to-equity ratio surged by 46.7 percentage points year-over-year to 273.4%, and the debt dependency ratio also rose to 54.6%. Due to declining operating profitability, EBITDA for 2025 amounted to a mere 5.4 billion won, causing the net debt-to-EBITDA ratio to deteriorate significantly to 61.7 times.

Ongoing large-scale capital expenditures are also weighing the company down. The investment to construct a new waste synthetic incinerator at the Cheongju plant—which has been underway since the end of 2023 with a total investment of 65 billion won—is constraining free cash flow. As of last year, 44.6 billion won had been invested. An additional 20.4 billion won is scheduled to be invested before the project’s completion in July of this year.

Senior Researcher Cho stated, “Even this year, first-quarter company-wide revenue decreased by 4.4% year-over-year, and the company posted an operating loss of 4 billion won, indicating that poor performance and an excessive debt burden continue,” adding “Although the company is making multifaceted efforts—such as recent increases in whiteboard paper sales prices, the launch of new products, and cost reductions through the completion of the incinerator investment—we believe the potential for profitability improvement in the medium to short term will be limited, given the structural oversupply of whiteboard paper and intense market competition,” he explained.

He added, “Once the capital investment is completed this July, the capital expenditure (Capex) burden will gradually ease; however, given the current weak operating profitability, it is expected to be difficult to reduce debt using internally generated cash.”