Investing.com -- Moody’s Ratings has downgraded the long-term corporate family rating (CFR) of Turkiye Sise ve Cam Fabrikalari A.S. (Sisecam) to B2 from B1 today. The downgrade also includes the probability of default rating (PDR) and the backed senior unsecured instrument rating of Sisecam. The same downgrade applies to the backed senior unsecured instrument rating issued by Sisecam UK Plc. The outlook for all entities has been changed from stable to negative.
The downgrade is due to Sisecam’s continued decline in performance, resulting in lower sales volumes and negative pricing pressures across most of their markets, including glass manufacturing, chemicals, and energy. The global glass manufacturing market has been affected by an increase in production capacity and weak demand prospects. In 2024, Sisecam’s revenue fell by 15% to TRY186 billion, and EBITDA deteriorated by 69% to TRY13.9 billion.
The company’s performance was weaker than expected due to lower sales in Europe and high domestic inflationary pressures. Sisecam’s adjusted leverage has increased to 5.7x in 2024 from 3.7x a year before. The Moody’s adjusted interest coverage has also deteriorated to 0.5x from 2.8x during the same period.
In 2024, Sisecam’s operating expenditures increased to 25% of sales from 21% a year before, mainly due to transportation and logistics expenses, indirect salaries, and higher wages due to inflation. Despite the company’s cost control measures, Moody’s does not expect Sisecam to return to positive free cash flow generation until 2027.
In 2024, Sisecam acquired the remaining 40% ownership of its natural soda ash investment from Ciner Group in Sisecam Chemicals Resources LLC and Pacific Soda LLC in the United States for $285 million. The company also increased its stake in Sisecam Wyoming LLC to 51%. These acquisitions will allow Sisecam to become a global leader in natural soda ash production.
Moody’s expects Sisecam’s operating performance to remain weak and bottom out during 2025. The company’s operating performance could improve with increased international demand, especially from Europe, as European economies gain momentum in the second half of 2025.
Sisecam’s B2 CFR reflects the company’s strong business profile and benefits from its leading market position in Turkiye and internationally. The rating also considers Sisecam’s sharp deterioration of credit metrics due to weak market fundamentals and high inflationary pressures in Turkiye.
Sisecam’s ratings also reflect environmental, social, and governance (ESG) considerations that are inherent to the glass manufacturing industry. The company’s reliance on short-term debt is considered a governance-related risk, although it was partly addressed by the $1.5 billion senior unsecured bond issuance in 2024.
Sisecam’s liquidity is adequate, supported by cash of TRY54 billion ($1.5 billion) and a Eurobond investment portfolio, time deposits, and other financial assets with an aggregate book value of TRY5.0 billion ($141 million) as of December 31, 2024.
Sisecam does not have any secured debt in its capital structure. The senior unsecured notes due in 2026 are rated in line with the company’s corporate family rating.
The negative outlook reflects Moody’s expectation of a delayed recovery of Sisecam’s internal and external demand and an extended period of growing market capacity. The outlook also considers the expectation of negative free cash flow generation in 2025 and 2026 and weak credit metrics during the next 12 to 18 months.
A rating upgrade is unlikely given the negative outlook. However, Sisecam’s ratings could be downgraded if its operating environment and financial performance deteriorate, resulting in a weakened liquidity profile or a sustained debt to EBITDA ratio exceeding 5x.
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