Research Update: Brazilian Auto Supplier Tupy 'BB' Ratings Affirmed On Acquisition Of MWM do Brasil, Outlook Remains Positive

On April 18, 2022, Brazil-based auto supplier Tupy S.A. announced the acquisition of International Indústria Automotiva da América do Sul (MWM do Brasil or MWM) for an enterprise value of R$865 million. S&P Global Ratings believes that the acquisition will bring additional gains of scale and diversification, on top of the ones following Tupy's acquisition of Teksid's assets last year. Still, the acquired assets have lower margins than Tupy's historical average of 13%-14% and the industry has been facing higher costs, which could pressure the company's consolidated profitability and cash flows. On April 20, 2022, we affirmed our 'BB' issuer credit and issue-level ratings on Tupy as well as our 'brAAA' national scale rating. Recovery rating of '3' (65%) remains

...- On April 18, 2022, Brazil-based auto supplier Tupy S.A. announced the acquisition of International Ind·stria Automotiva da AmTrica do Sul (MWM do Brasil or MWM) for an enterprise value of R$865 million. - S&P Global Ratings believes that the acquisition will bring additional gains of scale and diversification, on top of the ones following Tupy's acquisition of Teksid's assets last year. - Still, the acquired assets have lower margins than Tupy's historical average of 13%-14% and the industry has been facing higher costs, which could pressure the company's consolidated profitability and cash flows. - On April 20, 2022, we affirmed our '##' issuer credit and issue-level ratings on Tupy as well as our 'brAAA' national scale rating. Recovery rating of '3' (65%) remains unchanged. - The positive outlook on the global scale rating indicates a possible upgrade in the next 12 months if we have confidence that Tupy will post gross debt to EBITDA at 2.0x-2.5x and free operating cash flow (FOCF)...

Research Update