Research Update: Alpek S.A.B de C.V. 'BBB-' Ratings Affirmed, Outlook Remains Negative

Global economic downturn coupled with an oil price decline in 2020 has downside risks for the petrochemical industry. However, we expect Mexico-based petrochemicals producer Alpek S.A.B. de C.V. will maintain a resilient operating and financial performance in the next 12 months, mainly thanks to its sound demand for its products and its financial flexibility. Although we expect sales to fall in 2020 due to lower sales prices, this will be partly offset by a mid-single digit growth in volumes, stable margins, as well as a prudent financial policy that will allow the company to maintain sound leverage levels. We continue expecting the company's EBITDA margins to remain around 10% and debt to EBITDA at about 2.6x, while it maintains sound

...- Global economic downturn coupled with an oil price decline in 2020 has downside risks for the petrochemical industry. - However, we expect Mexico-based petrochemicals producer Alpek S.A.B. de C.V. will maintain a resilient operating and financial performance in the next 12 months, mainly thanks to its sound demand for its products and its financial flexibility. - Although we expect sales to fall in 2020 due to lower sales prices, this will be partly offset by a mid-single digit growth in volumes, stable margins, as well as a prudent financial policy that will allow the company to maintain sound leverage levels. We continue expecting the company's EBITDA margins to remain around 10% and debt to EBITDA at about 2.6x, while it maintains sound liquidity in the next 12 months. - On April 13, 2020, S&P Global Ratings affirmed its '###-' global scale issuer credit and issue-level ratings on Alpek. - The negative outlook on Alpek mirrors that on its parent, Group Alfa, indicating that a one-notch...

Research Update