International ratings agencies Fitch and Standard and Poor’s have confirmed positive ratings for Ukrainian Steel manufacturer Interpipe.

Fitch awarded Interpipe a long-term “B+” and a short-term rating of “B”, and an outlook rating of ‘stable’.
Meanwhile, ratings agency Standard & Poor’s last week confirmed a long-term corporate credit rating of ‘B+’ and a rating of ‘uaA’ by national scale to Interpipe. 

Commenting on the rating results, Interpipe managing director Alexandr Kirichko said both the Fitch and Standard & Poor’s ratings assignment represent a great step forward for Interpipe. 

'It is pleasing recognition of the company’s overall strategy to make Interpipe a truly global company, with the infrastructure to match. We are an ambitious company and welcome the symbolism of this rating,” he said.

The ratings reflect that Interpipe is well positioned among its international pipe peers, based on its low indebtedness and relatively-high profitability driven by favourable industry prospects and a low-cost production base. 

Its FY06 Ebitda margin rose to 25.5 per cent when compared to international pipe producers' average of 22.6 per cent.

'In addition, Interpipe has a low leverage of 0.5x versus the international peer average of 1.5x.  Interpipe’s financial metrics are in line with those of Russian metallurgical and mining companies,' he said. 

Fitch believes Interpipe's strong financial profile can help mitigate any potential impact arising from an industry downturn.  

Standard & Poor's analysts deemed Interpipe to benefit from a good market position; favourable cycles for seamless and welded pipes in the medium term; the stable and cash-flow-generative nature of the wheels business, and a material level of vertical integration in to steel making. 

The audit results mention the risks associated with operating in Ukraine, the relatively-volatile steel related costs, versatility of pipe demand and prices and a limited track record in reporting as a combined group.

Fitch notes Interpipe's diversified portfolio by product, compared to a typical pipes company. 

Although pipes are the main driver of revenues, wheels are a key contributor to profitability.

The company's revenues are also diversified by geography, with exports accounting for 79 per cent of pipes revenues and 47 per cent of wheels’ revenues. TradeArabia News Service