S&P changes Nemak outlook to negative

S&P said it changed its outlook for Nemak SAB de CV to negative from stable and affirmed the BB+ ratings on the company and its sustainability-linked bonds due 2028 and 2031. The recovery rating remains at 3 (56%). The agency also affirmed the national scale mxAA- rating.

Nemak reported 2023 total revenue of about $5 billion and adjusted EBITDA of $572 million missing the agency’s estimates by 5% and 7% respectively. Additionally, adjusted debt was $1.6 billion above S&P’s $1.4 billion forecast.

“The negative outlook indicates a potential downgrade if EBITDA remains constrained due to delayed industry-wide electrification transition, higher inflation, and lower-than-expected light-vehicle sales worldwide. This would mean that we could lower the ratings in the next 12-18 months if the company fails to reduce its debt to EBITDA to close to 2x or if its liquidity position weakens,” S&P said in a press release.

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