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Sibur's ZapSibNeftekhim investment project poses no immediate threat to its financial profile - Moody’s

August 10, 2015 TASS
Investment project of Sibur Holding's $9.5 bln ZapSibNeftekhim /previously known as ZapSib-2/ will not prevent the company from decreasing and sustaining its leverage, Moody's Investors Service reported on Friday.

"Sibur's sustainable export operations, high margins and strong operating cash flow, combined with investment flexibility and a conservative financial policy will mitigate both investment pressure and the weak operating environment in Russia," Moody's Vice President and Senior Analyst Ekaterina Botvinova was quoted as saying. "All Ba1-rated Russian companies, including Sibur, have negative outlooks on their ratings, which is in line with our negative outlook for Russia's Ba1 sovereign rating," Botvinova said.

Sibur's high margins and strong operating cash flow generation offset investment pressure, Moody’s said. Sibur's average five-year adjusted EBITDA margin is 30%, while adjusted operating cash flow reached 92 bln rubles ($2.5 bln) in 2014. The sustainability of this performance is rooted in Sibur's integrated gas processing and petrochemicals business, access to attractively priced feedstock and product and market diversification, making operating cash flow over 2015-20 comparable to its capital expenditure /capex/ of around $11 bln in US dollar terms, including ZapSibNeftekhim.

Moody's also notes that investment flexibility and commitment to a conservative financial policy contribute to Sibur's control over its external debt needs, leverage and liquidity. Analysts at Moody's expect that Sibur will reduce its adjusted debt/EBITDA to around 2.0x over the next 12-18 months, factoring in its EBITDA's growth potential and ability to adjust investments and dividend payouts in line with cash generation under an internal conservative leverage target. Signed hard-currency bank facilities for capex support Sibur's strong liquidity, the report siad.
Company — SIBUR
  • Full name
    open joint stock company SIBUR
  • Registration country
    Russia
  • Industry
    Chemical and petrochemical industry