Fitch Ratings has revised the long-term credit rating of the Uzbek Metallurgical Plant. This information is reported on the agency's website.

The company's rating is downgraded from "BB-" to "B+", with a stable outlook. Meanwhile, the standalone credit profile of the enterprise is at "b" instead of "b+", indicating a continued limitation of the company's liquid assets.

Agency experts linked the rating downgrade to delays in the launch of the new foundry and rolling complex. As a result, the credit burden on "Uzmet" will remain elevated for a longer period.

The readiness of the complex is currently around 90%. Its commissioning is expected in the middle of this year, whereas it was originally planned to be completed by the end of 2024. Fitch highlights the risks of further delays considering the plant's "limited experience" in launching new projects.

The project budget is estimated at €775 million, of which approximately 80% has already been financed. Just under half (€276 million) came from the plant's own funds, while about €340 million was provided by local banks and the Reconstruction and Development Fund. The plant is negotiating with foreign banks to finance the remaining expenses.

The launch of the foundry and rolling complex will enable the steel production volume at "Uzmet" to double, reaching 2.1 million tons per year. According to calculations, it will fully replace steel imports.

At the same time, the company's profitability has decreased since 2022 due to low prices in the local market, rising energy tariffs, and reduced metal supplies from Russia. The commissioning of the complex is expected to increase profitability to $90 per ton, according to Fitch.

Analysts also noted as potential risks "Uzmet's" dependence on raw material imports and the planned abolition of the monopoly on scrap metal purchases. On the other hand, the situation with local raw materials should improve with the development of the Tebinbulak deposit, where a mining and processing plant is expected to start operating by the end of this year.

The company's debt burden is expected to remain high in 2025, according to the agency. The debt-to-EBITDA ratio will be 5.5 before decreasing to 3.4 in 2026 and 3 after the complex reaches full capacity in 2027.

At the same time, "Uzmet" has a high degree of control and support from the government. The enterprise plays a strategic role as the producer of 80% of the steel products in the country.

The plant is also engaged in several other investment projects that could contribute to the expansion of production capacities. These include the expansion of ball rolling capacities to 500,000 tons.

The agency may downgrade "Uzmet's" credit rating in the event of a significant reduction in ties with the government or if a persistently high (3.5) debt burden is maintained. Conversely, a reduction in the debt burden (to 2.5 or lower) and an increase in liquidity would contribute to a rating upgrade.

Earlier, Spot reported on the plans of AGMK, "Uzmet," and other companies to issue bonds.