Global credit ratings agency Standard & Poor’s (S&P) expected limited impact of the latest production halt of the Galaxy Note7 premium devices on the ratings of the South Korean tech giant Samsung Electronics Co.

“We believe the impact on the ratings will be limited at this stage mainly because of Samsung Electronics’ significant net cash holdings of about 65 trillion won as of June 30 2016 and strong operating cash flow,” S&P said in a statement on Thursday.

S&P released the statement a day after Samsung Electronics slashed its July-September quarter operating profit guideline from 7.8 trillion won ($6.9 billion) to 5.2 trillion won after reflecting costs to cover global recall and discontinuation of the premium phone due to rising safety concerns. There have been a series of reports claiming that even replacement devices could catch fire.

“We see limited downside to our base-case forecast for the company given stronger-than-expected performance in its memory semiconductor, consumer electronics, and display panel businesses based on its leading market positions and recovering profitability in the businesses,” S&P added in the statement.

The global credit ratings agency, however, warned that the latest recall and product crisis will have a negative impact on the company’s operating performance over the new few quarters, citing a rise in additional costs and an absence of new smartphones on the pipeline.

The agency expected that in the mid- to long-term, the company would lose ground to its rivals in the global smartphone market due to tainted reputation for its product quality and brand, but “the extent and duration of such weakening in its market position remain uncertain at this point, and that it will “depend on how quickly the company can restore its reputation, possibly through the launch of a new flagship model in the first half of next year.”

By Ko Min-suh

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