Moody's downgrades rating for Indonesia's Chandra Asri to negative

03 August 2012 07:50  [Source: ICIS news]

SINGAPORE (ICIS)--Moody's Investors Service said on Friday it has downgraded its rating for Indonesia’s sole cracker operator Chandra Asri to negative from stable in view of the company’s declining profit margins.

The ratings firm in a statement changed the outlook on Chandra Asri’s B2 corporate rating and senior secured bond rating to negative from stable to reflect the “protracted decline in the company’s profit margins following a decline in its naphtha-ethylene spread”.

"Such pressure on its profit margins and weak credit metrics is likely to affect the company for the next 12 months," said Vikas Halan, a Moody's vice president and senior analyst.

In the last twelve months ending in June this year, Chandra Asri generated earnings before interest, tax, depreciation and amortisation (EBITDA) of $22m (€18m), with an EBITDA margin just around 1%, according to Moody’s.

In addition, the firm has increased its borrowings to fund its expansion into the butadiene segment, Moody’s added.

Chandra Asri is building a new 100,000 tonne/year butadiene (BD) plant at Cilegon in Indonesia which is expected to begin commercial production in mid-2013.

Its integrated petrochemical complex at Cilegon in Banten province, Indonesia, includes the only naphtha cracker in the country with a cracking capacity of 1.7m tonnes/year.

($1 = €0.82)

By: Nurluqman Suratman

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