Fitch and Standard & Poor’s confirm positive ratings for Interpipe
Posted: 02 July 2007
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International ratings agencies Fitch and Standard & Poor’s have confirmed positive ratings for Ukrainian Steel manufacturer Interpipe. Fitch awarded ratings to Interpipe a long-term “B+” and a short-term rating of “B”, and an outlook rating of ‘stable’. Meanwhile, ratings agency Standard & Poor’s last week confirmed a long-term corporate credit rating of ‘B+’ and a rating of ‘uaA’ by national scale to Interpipe.
Commenting on the rating results, Alexandr Kirichko, Managing Director of Interpipe said:
“Both Fitch and Standard & Poor’s ratings assignment represent a great step forward for Interpipe. It is pleasing recognition of the company’s overall strategy to make Interpipe a truly global company, with the infrastructure to match. We are an ambitious company and welcome the symbolism of this rating.”
The ratings reflect that Interpipe is well positioned among its international pipe peers, based on its low indebtedness and relatively high profitability driven by favourable industry prospects and a low-cost production base. Its FY06 EBITDA margin was 25.5% compared with international pipe producers' average of 22.6%. In addition, Interpipe has a low leverage of 0.5x versus the international peer average of 1.5x. Interpipe’s financial metrics are in line with those of Russian metallurgical and mining companies. Fitch believes Interpipe's strong financial profile can help mitigate any potential impact arising from an industry downturn.
Standard & Poor's analysts deemed Interpipe to benefit from a good market position; favourable cycles for seamless and welded pipes in the medium term; the stable and cash-flow-generative nature of the wheels business, and a material level of vertical integration in to steel making.
The audit results mention the risks associated with operating in Ukraine, relatively volatile steel related costs, versatility of pipe demand and prices and a limited track record in reporting as a combined group.
Fitch notes Interpipe's diversified portfolio by product, compared to a typical pipes company. Although pipes are the main driver of revenues, wheels are a key contributor to profitability. The company's revenues are also diversified by geography, with exports accounting for 79% of pipes revenues and 47% of wheels’ revenues. |
