TASHKENT, Uzbekistan, July 4. Fitch Ratings has revised Uzbekistan-based Artel Electronics LLC's (AE) Outlook to Positive from Stable, while affirming its Long-Term Issuer Default Rating (IDR) at 'B', Trend reports.
"The revision of the forecast reflects an improvement in the company's financial position, characterized by an improvement in leverage indicators and stabilization of operating margin, as well as an expected increase in free cash flow generation," the Fitch Ratings said.
AE's IDR continues to reflect the group's small scale, limited geographical diversification, exposure to Uzbekistan's operating-environment risks and high foreign-currency risk
"This is mitigated by the group's leading position in the domestic market and growing share of export sales. The latter should provide sustained revenue visibility, and support expected improvement in cash flow generation," the agency added.
Fitch notes that one of the key factors in the rating revision is the improvement of leverage.
“AE's EBITDA (Earnings Before Interest, Taxes, Depreciation, Amortization and Management) gross leverage improved to 2.3x in 2022, outperforming our forecast of 3.0x and reflecting better-than-expected revenue and EBITDA. We forecast sustained revenue growth in 2023 and stabilising EBITDA margin to underpin further leverage improvement. Fitch expects EBITDA gross leverage to remain at about 2.2x in 2023 and below 2.0x from 2024, supporting our Positive Outlook,” the agency said.