Fitch changes outlook for Russia's Sibur to positive

02 September 2010 09:12  [Source: ICIS news]

LONDON (ICIS)--Fitch Ratings has changed the outlook for Russian petrochemicals company Sibur to positive from stable, partly reflecting the group’s better-than-expected performance during 2009 and the first half of this year, the ratings agency said on Thursday.

Sibur's good performance “underlines the resilience of its business model in combination with timely measures by management to reduce costs and safeguard liquidity”, said Fitch analysts.

The positive outlook also reflected Fitch's improved expectations for the current year, they added.

The ratings agency said Sibur was expected to expand further its associated petroleum gas (APG) processing capacity and triple its polymer production capacity by the end of 2012, which is to result in stronger underlying profitability and cash generation in the medium term.

Fitch affirmed its long- and short-term issuer default ratings (IDR) for Sibur at 'BB' and 'B', respectively, but added that “successful execution of the capex (capital expenditure) programme over the next 18-24 months while maintaining moderate financial leverage and an adequate liquidity position could result in a rating upgrade”.

However, Fitch said the ratings remained constrained by Sibur's exposure to pricing volatility, political and regulatory risks in Russia and the expected supply-driven downturn in the chemicals cycle, characterised by significant capacity coming on stream in the Middle East and Asia.

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By: Hilde Ovrebekk
+44 20 8652 3214

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