The credit rating of “KuibyshevAzot” PJSC (hereinafter, the Company) reflects the high assessment of the operational profile, high profitability, strong liquidity, and the medium leverage and coverage.
“KuibyshevAzot” PJSC is one of the major enterprises of the Russian chemicals industry. The Company is a leader in the production of caprolactam and polyamide in Russia, the CIS and Eastern Europe, and it is also the largest manufacturer of technical and textile yarns, cord fabric, polyamide and blended fabrics in Russia. Its production sites are located in the Russian Federation (in the Samara, Kursk and Saratov Regions), as well as in Germany, China, and India.
KEY ASSESSMENT FACTORS
The Company’s strong operational profile is based on its low production costs compared to competitors in the global market. In addition to using the available raw material base (purchase of raw materials at domestic prices), the Company applies energy-efficient production technologies (in particular, in the production of cyclohexanone) and actively develops its own production of components necessary for higher product conversions. The product line is well diversified, while a flexible production model allows the Company to quickly change the structure of the product range depending on the prevailing market conditions and demand. The technological production efficiency is high due to the availability of capacities for deep processing of caprolactam, as well as for production of ammonia and nitrogen fertilizers, which result a significant share of products with high added value in the revenue structure. The Company is a successful player in the highly concentrated Russian nitrogen fertilizer market, occupying a share of around 5% of total production in Russia, and is also a leader in the segment of caprolactam and its derivatives.
The high level of corporate governance takes into account the Company’s consistent strategy aimed at developing production capacities and enhancing processing depth, and the multi-level risk management and internal control system integrated into the key processes, as well as the management structure presented by the board of directors and the board committees on audit, personnel and remuneration, social policy, strategic development and corporate governance, shareholder and public relations. The Company’s structure includes manufacturing enterprises, logistics assets, a distribution network, and trading companies located in various regions.
High profitability. In 2024, the FFO margin before net interest payments and taxes declined to 14.6% from 25.2% a year earlier. The decrease is largely due to falling margins in the caprolactam and its derivatives segment amid high prices for the main raw material component of the production cost (benzene). The Agency expects this indicator to exceed 17% in 2025 due to projected favorable market price dynamics.
Medium leverage. The ratio of the Company’s total debt to FFO before net interest payments grew to 4.3x in 2024 vs. 1.1x in 2023. Total debt increased due to the Company gaining control of a number of assets and their inclusion in the Company’s consolidation perimeter. Debt obligations include loans from the largest Russian banks, while the loan portfolio has a balanced structure, with a predominance of long-term ruble loans. Debt coverage (the ratio of FFO before net interest payments to interest payments) amounted to 9.3 x in 2024. During the forecast period (from 2026), the Company plans to implement a significant investment program for the development of production facilities, the financing of which may lead to a further increase in the ratio of total debt to FFO before net interest payments and, consequently, to a decrease in the coverage indicator.
Strong liquidity and low cash flow. The Company has a comfortable and smooth debt repayment schedule in the medium term (without peak repayments), as well as diversified sources of internal and external funding (positive FFO, significant account balances, as well as free limits on credit lines). In 2024, the free cash flow (FCF) margin was -4.9% vs. -8.9% a year earlier. The negative value of the indicator remains against the backdrop of an increase in capital investments and dividend payments.
KEY ASSUMPTIONS
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Annual average revenues to grow by at least 3% in 2025–2027;
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Implementation of the investment program as planned by the Company (no more than RUB 68 bln in 2025–2027);
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Dividend payments at no more than 30% of RAS net profits in 2025–2027.
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 ratio of total debt to FFO before net interest payments falling below 2.0x coupled with the weighted average FFO ratio before net interest payments to interest payments exceeding 5.0x;
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Weighted FCF margin exceeding 5%.
A negative rating action may be prompted by:
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Weighted FFO margin before net interest payments and taxes falling below 20% coupled with a negative weighted FCF margin (less than -3%);
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Weighted ratio of FFO before net interest payments to net interest payments falling below 2.5x, and liquidity getting worse.
RATING COMPONENTS
Standalone creditworthiness assessment (SCA): a+.
Support: none.
ISSUE RATINGS
There are no outstanding issues.
REGULATORY DISCLOSURE
The credit rating has been assigned to “KuibyshevAzot” PJSC based on the following methodologies: the Methodology for Assigning Credit Ratings to Non-Financial Corporations under the National Scale for the Russian Federation to calculate the SCA and determine the credit rating and the credit rating outlook of “KuibyshevAzot” PJSC 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 to ensure consistent and uniform application of ACRA’s methodologies, models, and key rating assumptions.
The credit rating of the bond issue of “KuibyshevAzot” PJSC assigned under the national scale for the Russian Federation was published by ACRA for the first time on December 3, 2019.
The credit rating and its outlook are expected to be revised within one year.
The credit rating was assigned based on data provided by “KuibyshevAzot” PJSC, information from publicly available sources, and ACRA’s own databases. The rating analysis was performed using the IFRS accounting (financial) statements of “KuibyshevAzot” PJSC as of December 31, 2024.
The credit rating is solicited and “KuibyshevAzot” 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 no additional services to “KuibyshevAzot” PJSC during the year preceding the rating action.
No conflicts of interest were discovered in the course of credit rating assignment.
