Mexico’s KUO with challenging outlook in 2009 – analysts

23 December 2008 19:40  [Source: ICIS news]

TORONTO (ICIS news)--Falling prices in the chemical business on the back of reduced commodity-linked input costs and lower demand in the auto sector are the key challenges facing Mexico's diversified chemicals and industrial group KUO, credit rating agency Fitch said on Tuesday.

However, KUO should be able to offset expected declines in revenues next year at least partially through savings from lower costs for energy and raw material, analysts said.

Helping the company were its cash balances and diversified revenue sources from inside and outside Mexico, they added.

KUO exports to more than 40 countries and holds market-leading positions in the chemicals, consumer products and automotive sectors, Fitch said.

According to KUO’s website, the group's chemical businesses include product lines for synthetic rubber, phosphates, polystyrene (PS) and carbon black.

Fitch said that KUO improved its 2008 operating performance from a year earlier, despite raw material cost volatility, certain shortages of production inputs, the lower level of overall economic activity and the current credit scarcity.

The agency affirmed its issuer default ratings for KUO’s debt at “B+” with a stable outlook.

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By: Stefan Baumgarten
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