SISE - Şişe Cam

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Fitch Şişecam'ın kredi notunu 2 kademe düşürdü.
https://rotaborsa.com/fitch-ratings-...nu-acikladi-3/

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Fitch Ratings - Dubai - 13 Dec 2024: Fitch Ratings has downgraded Turkiye Sise ve Cam Fabrikalari AS's (Sisecam) Long-Term Foreign-Currency (LTFC) and Long-Term Local-Currency (LTLC) Issuer Default Ratings (IDRs) to 'B' from 'BB-'. The Outlook on the IDRs is Negative. See below for a full list of rating actions.

The downgrade reflects a significant turn in Sisecam's product price and market environment with a dramatic fall in profit margins, which we expect to be protracted and possibly partially structural. Sisecam's leverage and coverage ratios have weakened considerably due to EBITDA fall and sizeable capital expenditure (capex).

The Negative Outlooks reflect the uncertain market environment and risks related to Sisecam's profitability trend, hinging on the company's ability to improve its product pricing and optimise capex and operating expenditure (opex).


KEY RATING DRIVERS

Loss of Pricing Power: Sisecam's market environment has turned sharply worse during 2024, leading to a significant revision of our rating case for the company. We expect economic challenges, declining demand in key markets, increased competition and inflationary pressure in Turkiye to affect revenue and profitability metrics compared with our prior expectation. The primary challenge has been managing product pricing on broadly stable volumes, while the company is no longer able to fully pass through increased costs (especially in its domestic base) and protect its margins.

We anticipate market conditions to bottom out in 2025, driven by easing inflationary pressures, the stabilisation of energy prices and a gradual improvement in demand across key sectors, but we do not expect Sisecam's EBITDA margin to reach historical levels.

Structurally Lower EBITDA Margin: Sisecam sacrificed its EBITDA margins in the short term in order to preserve market shares. However, the company is focusing on cost optimisation, including streamlining operations. We do not expect these measures to fully offset the adverse impacts of the market downturn and some of the changes on both demand and supply side (low-cost competition) may prove to be structural. We estimate EBITDA margin to reach about 8% for 2024 and 11% for 2025, based on Inflation Accounting Standards (IAS). Sisecam's reported EBITDA margin for 9M24 (not adjusted for IAS) was 14% compared with above 20% during 2020-2022.

Growth Capex, Negative FCF: The company is continuing its ambitious growth plans mainly in Hungary and in Turkiye with its greenfield glass packaging investment in the former and a greenfield flat glass investment in the latter. Those two business lines' growth and maintenance capex are 36% and 29%, respectively, of Sisecam's consolidated capex for 9M24. The balance of capex is allocated to other business lines as maintenance.

This strategy may have long-term benefits, but it contributes to negative free cash flow (FCF), which we expect to persist until 2027 and to higher leverage (expected in our previous rating case). We estimate total capex to be USD750 million in 2024 and about USD900 million annually for 2025-2026.

Weaker Credit Ratios: Sisecam's leverage has increased not only on weaker EBITDA, but also higher debt, exceeding our negative sensitivity for the prior rating. We expect leverage and coverage to remain outside our updated negative rating sensitivities until 2026. The company has a mix of short-term and long-term debt, with a significant portion denominated in FC and an annual refinancing need weakening our view of Sisecam's financial flexibility and contributing to the Negative Outlook.

Liquidity Could Strain: The company maintains a reasonable cash balance and has access to uncommitted credit lines, providing some buffer for short-term liquidity needs. However, ongoing negative FCF on high capex requirements may strain liquidity. Fitch expects that Sisecam will repay the remaining USD372 million of the USD700 million bond due in 2026. The company's ability to refinance upcoming debt maturities and secure new funding will be crucial in maintaining its liquidity position.


DERIVATION SUMMARY

Sisecam's business profile and profitability margins are comparable to those of Hestiafloor 2 (B/Positive) and Tarkett Participation (B+/Stable). In Fitch's view, Sisecam benefits from healthy geographical diversification and exposure to several industries, including construction, automotive and energy, and it has leading market shares in its core markets. However, Sisecam's rating is constrained by its high leverage, which we estimate at 10.4x (gross leverage) and 6.2x (net leverage) at end-2024 and 6.0x (gross) and 4.8x (net) at end-2025, weakened pricing power and exposure to hyperinflationary domestic market and foreign-exchange risks.

Sisecam's ratings are not constrained by Turkiye's Country Ceiling (BB-).


KEY ASSUMPTIONS

-- Revenue in Turkish lira to increase on average 20% for 2024-2027, also reflecting a gradual improvement in market conditions;

-- EBITDA margin to bottom out at about 8% for 2024, and to gradually increase towards 20% by 2027, reflecting cost control and improved pricing ability;

-- Capex of about USD750 million equivalent for 2024, peaking during 2025 and 2026 at about USD900 million;

-- We have assumed no dividends distribution beyond 2024;

-- Negative FCF, turning modestly positive for 2027, following margin improvement and capex reduction.


RECOVERY ANALYSIS

-- The recovery analysis assumes that Sisecam would be reorganised as a going-concern (GC) in bankruptcy rather than liquidated.

-- An administrative claim of 10% is used in line with the industry median and peer group.

-- The recovery analysis is translated into US dollars from liras since the majority of the capital structure is in dollars. The translation used a Fitch-calculated exchange rate for 31 September 2024.

-- Our GC EBITDA estimate of USD600 million reflects significantly lower EBITDA forecast on structural market shift with reduced cost passthrough.

-- An enterprise value (EV) multiple of 5x EBITDA is applied to the GC EBITDA to calculate a post-reorganisation EV, given Sisecam's leading market positions in both Turkiye and the international markets, and the relatively strong barriers to entry.

-- The waterfall analysis is based on the updated capital structure and consists of senior unsecured USD1,872 million notes and lira-denominated bonds and loans, and other bank credit facilities (all equal ranking).

-- The company has no factoring facilities. These assumptions, constrained by Turkiye's group D country classification for the recovery rating, result in a recovery rate for the senior unsecured instrument within the 'RR4' category. The principal and interest waterfall analysis output percentage on current metrics and assumptions is 50%.
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https://www.fitchratings.com/researc...ive-13-12-2024
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