Financial profile and credit metrics

The major credit rating agencies consistently rate EuroChem positively, with a stable outlook and little downside risk.

Our current ratings reflect EuroChem’s adequate liquidity and moderate financial policy coupled with healthy profit generation, which is underpinned by the advantageous cost competitiveness provided from vertical integration.

While our robust capital expenditure programme continues to be seen as limiting a positive rating action, the ratings agencies agree that the further broadening of EuroChem’s product portfolio through its potash expansion projects, and the accompanying reduction in capital expenditure, should support a higher rating.

Nonetheless, as we generate the majority of profits from assets located in Russia, the Russian country risk will likely remain a constraint on EuroChem’s rating.

Gearing
  • 31 December 2013 – Net debt/LTM EBITDA(2): 2.07
  • Targeted aross-the-cycle range of 1.5x-2.0x

Gearing

Debt mix (%)
  • Diversified sources of funding
  • Excellent track-record of numerous syndicated loan facilities, Eurobonds issues, and ECA-covered loans starting from 2004
  • All debt is unsecured
  • Weighted average cost of debt in dollar terms: ca 3.0%
  • Comfortable debt structure and maturity profile with remote refinancing risk

Debt-mix

CREDIT RATINGS

Strengths
  • Moderate financial policy and adequate liquidity
  • Currently good cost position, owing to vertical integration and access to relatively cheap gas in Russia
  • Strong performance and robust cash flow generation on the back of favourable market conditions underpin the Group’s capacity to support ongoing sizeable expansion projects
  • Credit metrics and expansion plans offer sufficient flexibility to withstand pricing pressure and demand volatility
  • Flexibility to scale down or temporarily delay some of the investments
Risks
  • Higher-than-average systemic risks associated with the Russian business and jurisdictional environment
  • Large capital expenditures over the next few years that will most likely lead to negative free cash flow in the medium term
  • Exposure to the cyclical fertilizer markets.