Research Update: Italy-Based Engineering And Construction Group Webuild Outlook Revised To Positive; 'BB' Ratings Affirmed

We anticipate Webuild SpA will post further EBITDA growth in 2024-2025 after a very solid 2023, reflecting high revenue visibility that its order intake provides. In our base-case scenario, we expect that our key credit metric, funds from operations (FFO) to debt, would stand at 35%-40% in 2024-2025, notwithstanding the negative free operating cash flow (FOCF) from the significant reversal of advance payments received in 2023. In our view, Webuild's credit quality benefits from the strategy aimed at reducing the group's risk profile by increasing its presence in low-risk countries, focusing on sustainable mobility and clean hydro energy, and improving profitability and working capital management. We therefore revised our outlook to positive from stable and affirmed our 'BB' long-term issuer

...- We anticipate Webuild SpA will post further EBITDA growth in 2024-2025 after a very solid 2023, reflecting high revenue visibility that its order intake provides. - In our base-case scenario, we expect that our key credit metric, funds from operations (FFO) to debt, would stand at 35%-40% in 2024-2025, notwithstanding the negative free operating cash flow (FOCF) from the significant reversal of advance payments received in 2023. - In our view, Webuild's credit quality benefits from the strategy aimed at reducing the group's risk profile by increasing its presence in low-risk countries, focusing on sustainable mobility and clean hydro energy, and improving profitability and working capital management. - We therefore revised our outlook to positive from stable and affirmed our '##' long-term issuer credit rating on Webuild. - The positive outlook reflects our view that we could raise the long-term rating to '##+' over the next 12 months if the group sustains resilient EBITDA margin at 8.5%-9.0%...

Research Update