The credit rating of PJSC “Koks” (hereinafter, the Group) has been downgraded due to the deterioration of the profitability assessment amid the continued significant leverage of the Group, which results in low assessments for leverage and coverage. The Negative outlook reflects the risks of a further decline of the assessments of these metrics, in view of their weak recovery in 2025 and anticipated similar dynamics over the forecast period (in 2026 and 2027).
The Group’s credit rating takes into account its scores for high market position and business level (due to the high degree of vertical integration of its metallurgical production), as well as medium indicators of geographic diversification of sales markets and corporate governance. The financial profile assessment is based on strong liquidity, medium size and profitability indicators, and high leverage coupled with low coverage.
The Group is one of Russia’s leading merchant pig iron producers and the country’s largest producer of merchant coke.
key assessment factors
The strong operating profile reflects the high degree of vertical integration (provision of coke, iron ore and coking coal). In 2022, the Group reoriented its supplies of pig iron from export markets to a related company that produces a wide range of steel products for construction purposes and is a key supplier of these products to the construction market of Russia’s Central Federal District. According to the Group, since 2025, this related company has been included in the pool of rolled steel suppliers for the Moscow—St. Petersburg high-speed railway project. The reorientation of pig iron sales contributes to greater financial stability. At the same time, the fact that merchant pig iron is a product with low added value that is used as a feedstock for the steelmaking segment limits the business assessment.
The Group has a consistent strategy that aims to build a vertically integrated holding company and expand the resource base for mining operations. The risk management system corresponds to the medium level for the corporate sector. The assessment of the Group’s structure takes into account its complexity and transactions with related parties, which, however, are economically justified.
Medium financial profile. In 2024, the FFO margin before interest payments and taxes declined to 6.2% (vs. 14.8% a year earlier), which was below the Agency’s expectations and led to a lowering of the assessment of this sub-factor.
In 2024, the ratio of total debt to FFO before net interest payments was 11.4x (vs. 5.4x a year earlier). This growth was driven by both a decline in FFO before net interest payments and taxes, as well as the Group’s total debt increasing. The coverage indicator (the ratio of FFO before net interest payments to interest payments) was 0.5x as of the end of 2024. Maintaining the debt service indicator at below 1.0x in 2025 may be the basis for a rating revision. The liquidity assessment takes into account significant undrawn limits on existing credit lines. The free cash flow (FCF) margin was -8.5% in 2024. A negative value for this indicator is also expected for 2025.
KEY ASSUMPTIONS
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Production indicators in line with the Group’s business plan;
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Total investment program of no more than RUB 18 bln in 2025–2027;
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No dividend payouts or loans to related companies in the forecast period until 2027.
POTENTIAL OUTLOOK OR RATING CHANGE FACTORS
The Negative outlook assumes that the rating will highly likely be downgraded within the 12 to 18-month horizon.
A positive rating action may be prompted by:
- The ratio of FFO before net interest payments to interest payments exceeding 2.5x and leverage (total debt to FFO before net interest) payments declining below 3.5x.
A negative rating action may be prompted by:
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Leverage (the ratio of total debt to FFO before net interest payments) remaining above 5.0x in 2025–2027;
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Coverage (FFO before net interest payments to interest payments) falling below 1.0x in 2025–2027.
rating components
Standalone creditworthiness assessment (SCA): bbb+.
Adjustments: none.
issue ratings
No outstanding issues have been rated.REGULATORY DISCLOSURE
The credit rating has been assigned to PJSC “Koks” 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 PJSC “Koks” 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 PJSC “Koks” assigned under the national scale for the Russian Federation was published by ACRA for the first time on February 21, 2020.
The credit rating and its outlook are expected to be revised within one year.
The credit rating was assigned based on data provided by PJSC “Koks”, information from publicly available sources, and ACRA’s own databases. The rating analysis was performed using the IFRS accounting (financial) statements of PJSC “Koks” as of December 31, 2024.
The credit rating is solicited and PJSC “Koks” 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 PJSC “Koks” during the year preceding the rating action.
No conflicts of interest were discovered in the course of credit rating assignment.
