Ittihad International Investment LLC

Overview Key strengths Key risks Diversified portfolio across printing and writing paper, tissue paper, metal conversion, and building materials industries, as well as business and environmental services, among other activities, generating United Emirates dirham (AED) 526 million of EBITDA in the last 12 months (as of June 2024). Commoditized products (mainly uncoated wood-free paper, tissue paper, and some building materials) limits pricing power; contributed about 70% of the group's EBITDA in 2023. Favorable cost position and bargaining power as a pulp buyer limits competition; high start-up costs in the paper industry are a barrier to entry. Exposure to volatile prices for raw materials such as pulp and copper. About 30% of EBITDA generated from stable, counter-cyclical operations backed by long-term

...We anticipate that Ittihad International Investment LLC's S&P Global Ratings-adjusted EBITDA will remain broadly stable in 2024. We expect it to be AED480 million-AED510 million. This is similar to adjusted EBITDA of AED507 million in 2023. S&P Global Ratings-adjusted EBITDA was AED268 million in the first half of 2024. An increase in freight costs due to geopolitical conflicts in the Red Sea will offset higher demand for paper and copper rods in 2024, in our view. Profitability of the company's uncoated wood-free paper and copper divisions has been hit by rising transportation costs because products are exported to North America, Europe, Asia, and India (in the case of paper) and Europe, Asia, and Australia (in the case of copper rods). In 2024, Ittihad will not fully pass these higher costs on to customers, in our view. The company's tissue paper, steel, cement, health care, and business services divisions are not, or are less, affected because they are broadly local. In 2025, we assume...

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