The credit rating of EuroTrans PJSC (hereinafter, EuroTrans, or the Company) reflects its strong business profile that takes into account the high diversification of fuel and related products sales formats and the availability of fast electric vehicle (EV) charging stations, high quality of corporate governance, as well as the Company’s medium position in the market of Moscow and the Moscow Region, and medium geographic diversification. The financial risk profile includes the Company’s medium size, high profitability and liquidity, medium leverage and coverage, as well as weak cash flow.
EuroTrans (TRASSA brand) is one of the largest independent fuel operators in the market of the Moscow area. The Company is included in the list of systemically important entities of the Russian economy approved by Russia’s Ministry for Economic Development. EuroTrans manages a chain of 56 gas stations, an oil depot (20,000 tons), a commercial kitchen, a plant producing antifreeze liquid under its own brand, and a fleet of fuel trucks. It is also developing a chain of 28 fast (150 kW) EV charging stations. In 2023, the Company changed its legal form from a joint-stock company to a public joint-stock company.
Key assessment factors
Strong operational risk profile. The Company is a successful player in the moderately concentrated gasoline and diesel fuel retail market of Moscow and the Moscow Region (the Company estimates its market share at around 3.2%). EuroTrans is a rather large chain of filling stations with an annual sales volume of over 500,000 tons of petroleum products. In addition, part of its revenues is generated by wholesale of fuel stored in its own oil depot to third-party gas station chains and vertically integrated oil companies. The business profile is based on the low cyclicality of demand for the Company’s products, given the steady growth in the number of motor vehicles, as well as the attribution of gasoline and diesel fuel to non-food essentials, good diversification of sales formats focused on the mass market segment, the presence of fast EV charging stations (stations with a capacity of 150 kW), and a wide range of related and fast food products supplied by the Company’s own commercial kitchen, as well as restaurants at gas stations. The Company operates under a recognizable brand, TRASSA, which it has been developing since 2005. EuroTrans uses a variety of promotional tools including a mobile application and fuel cards. The Company’s retail chain includes 56 gas stations in Moscow and the Moscow Region. The Company has a consistent strategy to develop its gas station and EV charging station chain. The risk management system is established by a relevant regulation and the insurance policy provides for mandatory insurance of hazardous production facilities. The Company has a board of directors, including independent directors, and board committees. The largest shareholders of EuroTrans are members of the board of directors, and they also act as CEOs in the Company’s subsidiaries.
Medium size and high profitability. In 2023, the Company’s revenues grew to RUB 128.8 bln vs. RUB 64.9 bln a year earlier, which improved the score for the Sales Volume sub-factor. FFO before fixed charges and taxes increased to RUB 12.2 bln last year vs. RUB 6.1 bln in 2022. The weighted average FFO before fixed charges and taxes margin for 2021–2026 is 9.5%.
Medium leverage. The weighted average ratio of adjusted total debt to FFO before fixed charges for 2021–2026 is 3.2x, while in 2022, it was 4.5x. The indicator improved due to an outpacing growth of FFO before fixed charges on the backdrop of the growing total debt of the Company. EuroTrans has a diversified credit portfolio that includes short-term credit lines from the largest banks, as well as bond issues, leasing obligations, and DFAs. The bulk of the Company’s portfolio is represented by long-term obligations with a smooth repayment schedule. The weighted average coverage — FFO before fixed charges to fixed charges — for 2021–2026 is 2.1x (a year earlier, the comparable indicator equaled 2.4x). The coverage is negatively affected by the key rate hikes and, as a consequence, higher debt service costs since the rate on most of the liabilities is floating.
Strong liquidity and weak cash flow. In 2023, the FCF margin amounted to -7.8% vs. -20.3% in 2022. The value is negative due to cash outflows for working capital replenishment (following an increase in the wholesale market operations) and higher capex. The peak of investments required to develop the chain of gas stations falls on 2023–2024. The weighted average ratio of capital expenses to revenues for 2021–2026 is expected at 6.1%. The liquidity assessment is determined by the availability of lines of credit, as well as the ability to raise funds in public capital markets. The Company issues bonds; it also raised funds as part of its IPO in 2023. Shareholder contributions also serve as an additional source of liquidity in 2024 and 2025.
KEY ASSUMPTIONS
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Weighted average revenues growing by at least 15% in 2024–2026.
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Capex not exceeding RUB 16 bln 2024–2026.
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Dividend payments as per the approved strategy.
Potential outlook or rating change factors
The Stable outlook assumes that the rating will highly likely stay unchanged within the 12 to 18-month horizon.
A positive rating action may be prompted by:
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Weighted average ratio of adjusted total debt to FFO before fixed charges falling below 2.0x coupled with weighted average ratio of FFO before fixed charges to fixed charges exceeding 2.5x;
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Weighted average FFO before fixed charges and taxes margin exceeding 10% coupled with the weighted average FCF margin sustainably growing to positive values.
A negative rating action may be prompted by:
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Weighted average ratio of adjusted total debt to FFO before fixed charges exceeding 6.0x;
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Weighted average ratio of FFO before fixed charges to fixed charges declining below 1.5x.
Rating components
Standalone creditworthiness assessment (SCA): a-.
Support: none.
ISSUE RATINGS
No outstanding issues have been rated.
Regulatory disclosure
The credit rating has been assigned to EuroTrans PJSC under the national scale for the Russian Federation based on the Methodology for Credit Ratings Assignment to Non-Financial Corporations under the National Scale for the Russian Federation and the Key Concepts Used by the Analytical Credit Rating Agency within the Scope of Its Rating Activities.
The credit rating of EuroTrans PJSC was published by ACRA for the first time on October 10, 2022. The credit rating and its outlook are expected to be revised within one year following the publication date of this press release.
A credit rating has been assigned to EuroTrans PJSC for the first time. The credit rating and its outlook are expected to be revised within one year following the publication date of this press release.
The credit rating was assigned based on data provided by EuroTrans PJSC, information from publicly available sources, and ACRA’s own databases. The credit rating is solicited and EuroTrans PJSC participated in its assignment.
In assigning the credit rating, ACRA used only information, the quality and reliability of which were, in ACRA’s opinion, appropriate and sufficient to apply the methodologies.
ACRA provided additional services to EuroTrans PJSC. No conflicts of interest were discovered in the course of credit rating assignment.
