Weener Plastics Group B.V.

The stable outlook reflects our expectation that Weener Plastics will pursue organic growth underpinned by increased demand for its plastic packaging and rising resin prices. We also foresee that Weener Plastics will have temporarily low FOCF, mitigated by an ample cash balance and gradual deleveraging to about 5x by December 2021. We view a downgrade as unlikely over the next 12 months. We could lower the ratings if Weener Plastics experienced unexpected customer losses, weakening EBITDA, or negative FOCF. We could also lower the ratings if the group's financial policy became more aggressive, especially with regard to shareholder remuneration, preventing any material deleveraging. We could raise the ratings if Weener Plastics generated annual FOCF of about €20 million and leverage

...We estimate that Weener Plastics Group B.V. (Weener Plastics) will gradually increase its earnings in 2021 and 2022, supported by its exposure to resilient and growing end markets. Netherlands-based rigid plastic packaging producer Weener Plastics is exposed to end markets such as personal care, food, and pharmaceuticals. In 2021-2025, we expect these markets to grow by 2%-5% worldwide and by 1.0%-3.5% in Europe. As such, we now anticipate that Weener Plastics' revenue will increase by 2%-3% in 2021 and 2022. At the same time, we anticipate that low-single-digit revenue growth in 2021 will be supported by higher demand for a new sustainable valve, mainly in the Netherlands, and organic growth in Russia and the U.S. We anticipate that rising resin prices will have a neutral impact as Weener Plastics passes them on to customers. However, the group's pass-through contracts come with a time lag of a few months, which increases costs temporarily. As such, we anticipate stable S&P Global Ratings-adjusted...

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