BAKU, Azerbaijan, Jan.28
By Natavan Rzayeva - Trend:
S&P Global Ratings company has affirmed credit ratings of Uzbek UzAuto Motors at level of ‘B+/B-‘ with stable outlook,Trend reports.
According to S&P, the current level of production of UzAuto Motors was negatively affected by the shortage of semiconductor chips and the gradual introduction of the GEM (General Motors' Global Emerging Markets) project, which will limit adjusted EBITDA in 2021-2022.
In addition, continued investment in the GEM project and a working capital outflow from prepaid vehicle deliveries will result in negative free operating cash flow (FOCF) and a significant reduction in the group's cash balances in 2022, which will put pressure on the company's liquidity if it fails to raise export finance credit lines.
Nevertheless, S&P believes that UzAuto Motors will be able to maintain its leading position in the car market of Uzbekistan, despite increased competition due to attractive prices against the backdrop of localization of production and cost optimization.
The Stable outlook on the company's rating reflects S&P’s view that UzAuto Motors will generate significantly higher revenues, with a negative FOCF of $100-150 million this year, with the remaining capital investment in the project GEM will be covered by raising funds from the Export Credit Agency during the first half of 2022.
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