Empower your business in Sri Lanka and internationally with Prifinance expert corporate and financial services. Streamline company formation and investment opportunities with our tailored advice and solutions.

Fitch affirms Sierra Cables PLC at ‘BB+’; outlook stable

Fitch Ratings has affirmed the National Long-Term Rating on Sierra Cables PLC at 'BB+(lka)'. The Outlook is Stable.

The affirmation reflects Fitch's expectation that Sierra's leverage will continue to improve in the next 12 months, driven by a sustained recovery in demand and profitability in the financial year to 31 March 2020 (FY20) due to strong project-based revenue growth and the sustained turnaround in its previously unprofitable subsidiary Sierra Industries due to sizeable contract wins.

We expect Sierra's net leverage, defined as lease-adjusted debt net of cash/operating EBITDAR excluding cash flows from overseas operations, to remain below 3.5x - the upper-limit for its rating. Leverage was high at 3.8x at FYE19, but has since improved to 1.7x based on trailing 12-month EBITDA to end-June 2019 (1QFY20).

Sierra's rating also reflects its modest market share in the domestic copper and aluminium cable market, which is counterbalanced by its exposure to cyclical end-markets, such as infrastructure and construction. The rating also factors in risks associated with its investments in international markets, where the company has yet to establish itself.

Notify of
Inline Feedbacks
View all comments
Would love your thoughts, please comment.x