Cemex reported that Fitch Ratings raised Cemex’s long-term foreign and local currency issuer default ratings (IDRs) to ‘BBB-‘ from ‘BB+’ and the hybrid subordinated issue to ‘BB’ from ‘BB’. -‘.
He added that Fitch also upgraded Cemex’s long-term national rating to ‘AA+(mex)’ from ‘AA(mex)’ and affirmed the short-term national rating at ‘F1+’ and the rating outlook is stable.
Fitch detailed that the upgrade of the ratings reflects the strengthening of Cemex’s credit profile as a result of a sustainable improvement in the generation of operating cash flow, an effective debt reduction strategy in recent years and a robust liquidity position that includes credit lines. unused committed credit.
The rating agency expects Cemex to maintain an adjusted net leverage ratio within the range of 2.0 to 2.5 times in the coming years, while cautiously managing its growth strategy in key markets and its environmental, social and governance (ESG) investments. social and governance).
He detailed that among the key factors for the improvement in the rating is the increase in cash flow, as he expects that during 2024 Cemex will continue to register solid cash flow generation, driven by a marginal improvement in volumes.
Another factor is the flexibility to manage investments, since Cemex’s capital investment strategy, mainly related to strategic capex ($600 million of a total capex of $1.6 billion), will boost the generation of free cash flow (FFL) and , ultimately, leverage indicators.
Solid FCF generation also influenced the rating upgrade, as Fitch estimates Cemex’s FCF will be around $605 million through 2024, $120 million in dividend distributions and non-recurring events of $503 million in payments related to the tax fine from Spain and the net inflow of around $600 million related to the sale of assets in the Philippines.
Likewise, Fitch projects that Cemex’s net leverage to EBITDA will be around 2.3 and 2.1 times in 2024 and 2025, according to its calculations, which is in line with the investment grade rating level for Construction Materials companies.
Fitch estimates that Cemex’s debt will be around $8.1 billion at the end of March 2024. This calculation excludes financial leasing obligations, and includes $900 million from two hybrid issuances (50 percent equity credit) and $620 million from securitization of accounts receivable.
