International credit ratings agency Fitch Ratings has announced that it has revised Russian steelmaker MMK’s outlook to positive and affirmed its long-term rating at ‘BB+’.
According to Fitch, the positive outlook reflects MMK's strong financial performance, which has largely been in line with Fitch's expectations. In 2015, MMK was able reduce its debts and for 2016 Fitch expects a further decrease in debt, which will offset the lower funds from operations (FFO), due to lower steel prices and the challenging operating environment in Russia.
In addition, Fitch stated that MMK generated around 70-80 percent of its revenues in its domestic market, where the operating environment remains challenging. Fitch also expects to see some stabilization in the Russian economy, which would provide some comfort that MMK will be able to maintain its current financial profile. An improvement in profitability for MMK’s Turkish operations would also be positive for the credit profile.
Meanwhile, for MMK, Fitch expects a decline of up to two percent in sales volume in the current year, with an average 1.4 percent recovery afterwards.