Credit rating agency Fitch increased the national long-term ratings of Dominican Republic’s steelmaker Gerdau Metaldom to A(dom) from A-(dom), at the same time it affirmed the company’s short-term ratings at F1(dom). Gerdau Metaldom’s outlook is stable.
According to the credit rating agency, the increase in the ratings of the Gerdau owned steelmaker is due to the positive synergies derived from the merger between Gerdau Metaldom and the Complejo Metalurgico Dominicano S.A. (Metaldom) in Q4 2014.
The merger, along with a higher production scale, helped Gerdau Metaldom reach more efficient costs, strengthening its management and helping it cope with a cycle of low prices and competitive pressures coming from unfair trade practices.
Fitch labeled Gerdau Metaldom’s capital structure as “conservative,” adding it expects the company will maintain such a capital structure.
With revenues of $425 million in 2015, Fitch said Gerdau Metaldom is expected to increase steel sales volumes by 2016 and 2017 thanks to the improved dynamics in the domestic residential and commercial construction sectors. Export volumes should remain stable, it added.
Fitch also forecast Gerdau Metaldom’s EBITDA margin to improve in 2016 thanks to synergies of the merger. The company’s consolidated EBITDA in 2015 was $54 million.