[Edaily Marketin Reporter LEE GEON-EOM ] Korea Ratings (Korea Credit Rating Agency) announced on the 30th that it has maintained the credit rating of Doosan Fuel Cell(336260)’s unsecured bonds at BBB and downgraded the outlook from “Stable” to “Negative.” The main reasons cited in the analysis are the accumulation of operating losses due to large-scale initial costs associated with entering the solid oxide fuel cell (SOFC) market—a new business venture—and cost pressures from its flagship products, coupled with the difficulty of alleviating financial burdens in the short term due to weakened cash generation capacity.

Doosan Fuel Cell continues to grow in scale as it begins full-scale delivery of orders secured in the general hydrogen tender market. Last year, its annual standalone revenue reached 4549억 won, a 10.5% increase from the previous year. However, profitability deteriorated sharply, with the company posting an operating loss of 1037억 won during the same period, marking a shift into the red.

Seo Min-ho, a senior analyst at Hanshin Rating, stated, “The trend toward losses began as high-cost inventory produced during the period of low operating rates in 2023 started shipping in the second half of 2024, and this was compounded last year by rising prices of key raw materials such as platinum.” “In particular, during the commercialization of the SOFC business—which began mass production in July of last year—entry costs for the new business, such as losses from the first-order project and delays in stabilizing initial yield rates, were reflected all at once, leading to a massive operating loss,” he explained.

He continued, “In the first quarter of this year, the deficit narrowed somewhat as deliveries of our flagship phosphoric acid fuel cells (PAFCs) increased and SOFC yield rates improved slightly,” he noted, but added, “Considering the increased burden of fixed costs following large-scale facility investments, transitional costs associated with establishing the SOFC mass production system, and downward pressure on selling prices due to intensifying competition in the hydrogen tender market, it is expected to be difficult to escape the current low level of profitability for the time being.”

The accumulated losses have directly undermined the company’s financial soundness. Due to asset impairments and accumulated interest expenses, Doosan Fuel Cell’s cumulative net loss from 2023 through the first quarter of this year alone amounts to approximately 160 billion won.

As a result, as of the end of March this year, the debt-to-equity ratio on a standalone basis soared to 264.4%, and the debt dependency ratio rose to 50%. Net debt, which had been reduced to 3102억 won by the end of 2024, expanded to 5328억 won by the end of March this year due to a combination of funding requirements related to the technology licensing agreement with U.S.-based HyAxiom and working capital burdens.

Senior Analyst Seo noted, “With the completion of the new SOFC plant last June, the burden of large-scale capital expenditures (CAPEX) is expected to gradually decrease going forward,” but added, “However, a combination of weak profitability in the core business, working capital requirements associated with business expansion, and delays in stabilizing yields for new businesses is constraining a significant improvement in operating cash flow.”

He added, “Ultimately, the combination of increased financial costs from higher debt and reduced capital capacity due to accumulated losses creates a structure in which the company will inevitably continue to face an excessive financial burden for the time being.”