S&P views Industrias Penoles negatively

S&P said it revised its outlook on Industrias Penoles SAB de CV to negative from stable and affirmed its BBB issuer and debt ratings.

“The outlook revision to negative reflects the hit on Penoles' EBITDA and net leverage, mainly because of higher costs of goods sold (COGS). The main factors for the rise in costs are the substantial appreciation of the peso against the dollar (lifting production costs in pesos, which represent approximately 50% of total costs) and the inflation-fueled hike in critical inputs, such as energy, operating materials, maintenance, and repairs. As a result, we expect an increase in cash costs for the extraction and refining of the company's main metals for the following years, depressing EBITDA margins,” S&P said in a press release.

The agency warned it could downgrade Penoles within 12 months mirroring an expectation of lower EBITDA, given unstable macroeconomic conditions.

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