Fitch: Votorantim Cimentos ‘backbone’ of parent rating

Fitch: Votorantim Cimentos ‘backbone’ of parent rating
Published: 26 August 2014


Fitch has affirmed the ratings for Votorantim and its subsidiaries, highlighting that its cement division continues to be the “backbone of the parent company's rating”.

The ratings agency notes that Votorantim Cimentos (VCSA) is the key operating subsidiary of Votorantim Participacoes SA (VPAR). "VCSA is poised to improve its operating cash flows due to investments that have increased its cement capacity in Brazil from 23Mta to 32Mta since 2011," Fitch said in a statement. It projects VCSA's standalone net debt-to-EBITDA ratio will decline to 2.8x in 2014 from 3.3x in 2013.

On the unfavourable ruling from Brazil's anti-trust agency, CADE, that resulted in a BRL1.5bn fine and the forced sale of certain assets, Fitch says that Votorantim Cimentos will most likely be forced to post guarantees during the appeal process, which is expected to extend beyond 2014. In the event that VCSA has to pay the fine during 2014, Fitch projects pro forma net leverage would be approximately 3.2x.