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15.12.2006
OJSC "Mariupol Metallurgical Plant" assigned uaАА- (uaAA minus) credit rating
"Credit-Rating", a nationally-recognized credit rating agency in Ukraine has today announced the assignment of the uaAA- (uaAA minus) long-term credit rating to "Mariupol Metallurgical Plant named after Illytch" OJSC ("the company"). The main company`s activity is manufacturing of rolled iron, pipes and balloons and of other products. In the course of analysis the "Credit-Rating" agency used company`s financial reports for 2001 9 months 2006, as well as other inside information furnished by the company.
The uaAA issuer rating reflects very strong capacity of an obligor to meet its commitments on an obligation. This rating slightly differs from obligors rated uaAAA. The "+" and "-" modifiers denote rating`s relative status within major categories.
Factors supporting the credit rating
- The company is one of leaders in Ukrainian metallurgical industry, which gives ca. a quarter of the overall national industrial production, and which is a Ukrainian specialization in the global division of labour called forth by availability of own raw materials resources (iron ore and braunite, coal) and by developed infrastructure.
- Growth of company`s major indicators over 2001-2005, specifically the net income grew 2.9x (from UAH 5.0bn to UAH 14.3bn), profit - 99.3x (from UAH 12.8m to UAH 1.3bn) total assets increased 2.1x (from UAH 4.3bn to UAH 8.9bn), own capital 2.4x (from UAH 3.2bn to UAH 7.7bn).
- Company`s high liquidity and financial stability indices, specifically (as of 1 Oct. 2006) the total liquidity ratio was 2.9, the quick liquidity ratio was 1.7, the absolute liquidity ratio was 0.5, the financial independence ratio was 0.9
- The company has generated operating cash flows over the past few years, at the expense of which the practically all current company`s activity and development are financed.
- Graduation of Ukraine to market economy status and expected joining the WTO shall strengthen competitive positions of Ukrainian metallurgical companies on the global market.
Factors constraining the credit rating
- The company requires large investments for technical re-equipment, which may lead to decrease in free cash flow.
- Lack of own raw materials resources in conditions of vertical integration in national mining and smelting industry makes the company dependant on competing financial and industrial groups.
- Weakness of national market of ferrous metals poses risks connected with external economic climate, discriminatory actions against export operations and exchange rates fluctuations.
- Low level of company`s information transparency.
Information on all the credit ratings assigned in accordance with the Ukrainian national scale may be found in the REUTERS and BLOOMBERG information systems.
For further information, please contact:
Information and analytic department
Sergey Rozumyak +38 044 490 25 50
SRozumyak@credit-rating.com.ua
