Ashinsky Metal Works’ Credit Rating Affirmed At‘A-’, Outlook Revised To Stable From Negative
OREANDA-NEWS. National Rating Agency has affirmed its national scale ‘A-’ credit rating on Ashinsky Metal Works PJSC (AMW). The rating outlook has been revised to Stable from Negative. On Feb. 21, 2014, AMW was assigned NRA’s ‘BBB+’ credit rating, which was raised to ‘A-’ on Mar. 10, 2015. On Aug. 8, 2015, a Negative outlook was assigned to AMW’s rating.
The rating affirmation is driven by the company’s improved 1H2015 operating performance, namely, by its increased IFRS revenue (+ 28% year-on-year) and gross profit (RUR 553.5 million according to Russian GAAP-based financials for the nine months ended Sep. 30, 2015, up 28.2% year-on-year ). The company’s net profit increased almost 7x to RUB 905.5 million. The rating also benefits from the company’s long maturity debt profile. AMW has a long track record of successful operations and a positive credit history, while the modernization and enhancement of its production assets strengthens its competitive position.
Offsetting these strengths is the company’s currency risk, stemming from its sizable FX-denominated debt component (around 75% of its total debt as at Sep. 30, 2015). The ruble devaluation against the euro has significantly increased the company’s debt service expenses and debt size in ruble terms, weakening its financial strength and profitability metrics. According to the AMW’s Russian GAAP-based financials for the nine months ended Sep. 30, 2015, a sales income of RUB 800.6 million translated into a tax loss of RUB 376.5 million. The negative effect of changes in currency exchange rates amounted to RUB 667.3 million.
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