Fitch Ratings: EU Steelmakers Well Placed To Weather Downturn
01 Novembre 2011 - 4:06PM
Dow Jones News
Credit ratings agency Fitch Ratings Inc. said Tuesday that
European Union steelmakers are better placed to face another steel
demand and price shock in 2012 than during the previous financial
crisis at the end of 2008, although challenges remain.
Fitch Ratings said in a note that European steelmakers are
sitting on slightly lower gross debt levels than the previous
financial crisis of 2008-09, when a global economic downturn took a
bite out of steel demand. Steelmakers are also already taking steps
to conserve cash by reducing capital expenditure and dividends;
they have also improved their liquidity positions by lengthening
their debt maturity profiles, it said.
"Steel companies are...now far less reliant on commercial bank
funding, having refinanced short-term debt primarily in the
corporate bond markets," it said. Steelmakers are "in a better
position to cope compared to 2008."
The ratings agency also said lower inventories should help
lessen the impact of a sharp demand slump since steelmakers won't
have to wait for destocking to take place before selling more
steel.
Fitch said diversified and integrated steel companies with
moderate debt levels, strong liquidity and some flexibility in the
rollout of capital expenditure programs are best placed to
withstand a downturn.
Such steelmakers include the world's largest steelmaker,
ArcelorMittal (MT), which refinanced its debt in the bond markets
at an average maturity of five years and reduced gross debt from
$34 billion at the end of 2008 to $26 billion at the end of last
year, Fitch said.
Germany's ThyssenKrupp AG (TKA.XE) is another example of a
well-positioned steelmaker with strong liquidity of about EUR5.5
billion at the end of March, including cash and equivalents of
EUR2.0 billion and undrawn committed credit lines of EUR3.5
billion, Fitch said. At the end of 2010, 60% of ThyssenKrupp's
total debt was made up of corporate bonds, compared with 45% in
2008, Fitch said.
-By Alex MacDonald, Dow Jones Newswires; +44 (0)20 7842 9328;
alex.macdonald@dowjones.com
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