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| CJ ENM 사옥. (사진=연합뉴스) |
[Alpha Biz=(Chicago) Reporter Kim Jisun] A warning light was turned on for CJ ENM's credit rating, which caused an "earning shock" in the first quarter of this year.
This is because the financial burden is increasing as content production costs increase and the deficit of the online video service (OTT) business accumulates.
According to the credit rating industry on the 10th, local credit rating agencies are reviewing the appropriateness of CJ ENM's credit rating ahead of regular ratings in the first half of this year. Launched in 2018 with the merger of CJ O Shopping and CJ E&M, CJ ENM has maintained its credit rating of AA- (stable) for the past five years.
There has been no change in credit ratings for 13 years since the Korea Credit Rating raised CJ O Shopping's credit rating from A + to AA- (stable) in October 2010 before the merger.
However, as earnings deteriorated earlier this year, there is a growing concern that creditworthiness may be labeled 'negative'. "Considering the trend of falling profitability and the expanded financial burden, the downward pressure on CJ ENM's credit rating has increased," Nice Investors Service said in a report earlier this year. "We will focus on whether to improve performance during the Tipping and Fifth seasons, and the level of reducing financial burdens, including reducing the size of borrowing."
CJ ENM announced on the 4th that its operating loss in the first quarter on a consolidated basis was 50.3 billion won, which is a provisional estimate of a year-on-year deficit. CJ ENM's operating profit last year was 137.4 billion won, down 53.7% from the previous year.
According to Nice Credit Rating, factors for reviewing the downward revision of CJ ENM's credit rating include △EBIT/sales of less than 4% △ exceeding 15% dependence on sequential deposits. As of the end of last year, CJ ENM's dependence on EBIT/sales and sequential deposits was 2.9% and 22.0%, respectively.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
