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COMMENTS

Issuer Ranking: EMEA Chemical Companies, Strongest To Weakest


Issuer Ranking: EMEA Chemical Companies, Strongest To Weakest

Here, S&P Global Ratings ranks chemical companies in Europe, the Middle East, and Africa that we rate, from strongest to weakest. We rank companies, in turn, by the rating, outlook, stand-alone credit profile (SACP), business and financial risk profile, and liquidity assessment. Investment-grade companies are ranked by business risk profile, then financial risk profile. Speculative-grade companies are ordered by financial risk profile, then business risk profile. Companies are then listed in alphabetical order, if not distinguished by these factors.

In line with our corporate rating methodology, the final rating may differ from the SACP, where government, group, or rating above the sovereign considerations apply. Where the SACP differs from the anchor, as it does for a quarter of the ratings, we have applied one or more modifiers, which may include that for liquidity. We've noted the anchor and active modifiers of each company for informational purposes only. For our more detailed analysis, please refer to the company-specific pages on RatingsDirect via the hyperlinks below.

As we show in the charts and comments at the end of this report, most of our business risk assessments are closely correlated with the corresponding competitive positions. Where they diverge, it is usually because we consider country risk higher, and this constrains the competitive position. Government or group ownership is an explicit rating factor for about 13% of the companies. In most cases, our analysis of the ownership results in a rating lower than the SACP.

For our sector outlook and analysis, please refer the Related Research section at the end of this article.

Ranking Table

EMEA Chemical Companies, Strongest To Weakest
Company FC LT Outlook SACP Business risk Cash flow and leverage Liquidity Anchor Modifier

Industries Qatar QSC

A+ Negative bbb+ [3] Satisfactory [1] Minimal Strong a- CRA: Negative (-1 notch)

Linde plc

A Stable a [1] Excellent [3] Intermediate Strong a+ FP: Negative (-1 notch)

BASF SE

A Stable a [2] Strong [3] Intermediate Adequate a-

Saudi Basic Industries Corp.

A- Stable a+ [2] Strong [2] Modest Strong a+ CRA: Positive (+1 notch)

L'Air Liquide S.A.

A- Stable a- [1] Excellent [4] Significant Adequate a-

Koninklijke DSM N.V.

A- Stable a- [2] Strong [2] Modest Exceptional a FP: Negative (-1 notch)

Sika AG

A- Stable a- [2] Strong [3] Intermediate Strong a-

Evonik Industries

BBB+ Stable bbb+ [2] Strong [3] Intermediate Strong bbb+

Akzo Nobel N.V.

BBB+ Stable bbb+ [3] Satisfactory [1] Minimal Strong a FP: Negative (-2 notch)

Arkema S.A.

BBB+ Stable bbb+ [3] Satisfactory [2] Modest Strong bbb+

Borealis AG

BBB+ Stable bbb [3] Satisfactory [2] Modest Strong bbb+ FP: Negative (-1 notch)

EQUATE Petrochemical Co K.S.C.C.

BBB+ Stable bb+ [3] Satisfactory [4] Significant Strong bb+

Solvay S.A.

BBB Stable bbb [2] Strong [4] Significant Strong bbb

Imerys SA

BBB Stable bbb [3] Satisfactory [3] Intermediate Strong bbb

LANXESS AG

BBB Stable bbb [3] Satisfactory [3] Intermediate Strong bbb

Yara International ASA

BBB Stable bbb [3] Satisfactory [3] Intermediate Adequate bbb

Syngenta AG

BBB- Stable bbb- [2] Strong [4] Significant Adequate bbb CRA: Negative (-1 notch)

Sasol Ltd.

BBB- Stable bbb- [3] Satisfactory [4] Significant Strong bbb-

Clariant AG

BBB- Stable bbb- [3] Satisfactory [4] Significant Adequate bbb-

Israel Chemicals Ltd.

BBB- Stable bbb- [3] Satisfactory [4] Significant Adequate bbb-

PhosAgro PJSC

BBB- Stable bbb- [4] Fair [2] Modest Adequate bbb-

OCP S.A.

BBB- Negative bbb- [3] Satisfactory [4] Significant Adequate bbb-

SPCM S.A.

BB+ Stable bb+ [3] Satisfactory [4] Significant Adequate bb+

Orion Engineered Carbons S.A.

BB Positive bb [4] Fair [4] Significant Strong bb

Ineos Styrolution Holding Ltd.

BB Stable bb+ [4] Fair [3] Intermediate Adequate bb+

Ineos Group Holdings S.A.

BB Stable bb+ [3] Satisfactory [4] Significant Strong bb+

OCI N.V.

BB Stable bb- [4] Fair [5] Aggressive Adequate bb-

K+S AG

BB Negative bb [3] Satisfactory [5] Aggressive Strong bb

Inovyn Ltd.

BB- Positive bb- [4] Fair [4] Significant Adequate bb CRA: Negative (-1 notch)

EuroChem Group AG

BB- Positive bb- [4] Fair [5] Aggressive Adequate bb-

Uralkali OJSC

BB- Positive bb- [4] Fair [5] Aggressive Adequate bb-

Specialty Chemicals International B.V.

B+ Stable b+ [4] Fair [5] Aggressive Adequate bb- CRA: Negative (-1 notch)

Composite Resins Subholding B.V

B+ Stable b+ [5] Weak [5] Aggressive Adequate b+

Nouryon Holding B.V.

B+ Stable b+ [3] Satisfactory [6] Highly leveraged Strong b+

OXEA S.a.r.l., Luxembourg

B+ Stable b [4] Fair [6] Highly leveraged Adequate b

Allnex (Luxembourg) & Cy SCA

B Stable b [4] Fair [6] Highly leveraged Adequate b

Atotech UK Topco Ltd.

B Stable b [4] Fair [6] Highly leveraged Adequate b

European Crops Products 2 Sarl

B Stable b [4] Fair [6] Highly leveraged Adequate b

Archroma Holdings S.à r.l.

B Stable b [5] Weak [6] Highly leveraged Adequate b

BCP VII Jade Topco (Cayman) Ltd.

B Stable b [5] Weak [6] Highly leveraged Adequate b

Fire (BC) S.a r.l.

B Stable b [5] Weak [6] Highly leveraged Adequate b

Ignition Topco BV

B Stable b [5] Weak [6] Highly leveraged Adequate b

Perstorp Holding AB (publ)

B Stable b [5] Weak [6] Highly leveraged Adequate b

Seqens Group Holding

B Stable b [5] Weak [6] Highly leveraged Adequate b

Flint HoldCo S.a r.l.

B- Stable b- [4] Fair [6] Highly leveraged Adequate b CRA: Negative (-1 notch)

Monitchem Holdco 2 S.A.

B- Stable b- [4] Fair [6] Highly leveraged Adequate b CRA: Negative (-1 notch)

Nitrogenmuvek Zrt.

B- Stable b- [5] Weak [6] Highly leveraged Adequate b-
Source: S&P Global Ratings. Scores as of July 1, 2019. CRA--Comparable ratings analysis. FC--Foreign Currency. LT--Long term. SACP--Stand-alone credit profile.

The table and charts in this publication provide an overview of the 47 entities we rate in the EMEA chemical industry. We rate 22 entities as investment grade ('BBB-' and above) and 25 entities as speculative-grade ('BB+' and below).

Chart 1

image

Across the corporate universe, 60% of our ratings are speculative grade. This compares to about 53% of EMEA chemical companies that carry ratings below 'BBB-'. About half of these companies are owned by financial sponsors and carry comparatively higher financial risk.

Chart 2

image

Presently, our outlooks on the ratings within the sector are most often stable. Given the broadly supportive market fundamentals in recent years, operating efficiencies, and financial liquidity and balance sheet cushions, many of our ratings have some headroom, supporting our outlooks.

Our business risk profile assessments typically mirror our view of competitive position in this sector (see chart 3). Where they diverge, it is usually because we consider country risk higher, and this constrains the business risk profile.

image

The most common financial risk profile assessments in this sector are significant and highly leveraged (see chart 4). Over 80% of the issuers with significant assessments have relatively high business risk assessments of satisfactory or above and two-thirds carry an investment-grade rating. Some of these issuers participated through acquisitions in the ongoing consolidation of the sector, resulting in, sometimes temporary, elevated financial leverage.

The highly leveraged assessments typically reflect companies with stretched balance sheets and sponsor-backed holding company loans.

Chart 4

image

Roughly one-quarter of the ratings incorporate one or more modifiers. Most often, this is the comparative rating analysis that we use for credit considerations that we have not already factored into the ratings. In the remaining cases our assessment of a company's financial policy refines the view of a company's risks beyond the conclusions arising from the standard assumptions in the cash flow/leverage assessment. This could, for example, capture the risks related to a company's appetite for large-scale debt-financed M&A or shareholder distributions that cannot be confidently predicted with regard to amount and timing.

We consider currently all of our rated chemical issuers to have liquidity that is adequate or better (see chart 5). This reflects the sector's good access to debt markets. Typically, the amount of cash that chemical companies maintain, combined with their cash generation and liquidity resources, will cover the uses of cash to which they have committed over the next 12 months by 1.2x or more.

Chart 5

image

The ratings and scores in this document are as of July 1, 2019. To keep it concise, the list only discloses scores for the main rated entity of larger corporate groups. We may omit certain entities, such as subsidiaries or holding companies, where the ratings are linked to those on their parent companies.

Related Criteria And Research

Related Criteria
  • Group Rating Methodology, July 1, 2019
  • Rating Government-Related Entities: Methodology And Assumptions, March 25, 2015
  • Key Credit Factors For The Commodity Chemicals Industry, Dec. 31, 2013
  • Key Credit Factors For The Specialty Chemicals Industry, Dec. 31, 2013
  • Corporate Methodology, Nov. 19, 2013
Related Research
  • Industry Top Trends Update: Chemicals, July 25, 2019, https://www.spratings.com/documents/20184/6627647/Industry+Top+Trends+Update+Chemicals/6f4df99f-b109-5cbd-9c3f-0857c4750124
  • S&P Global Ratings Publishes Updated Global And Regional Corporate Rating Component Scores Reports, July 18, 2019
  • ESG Industry Report Card: Chemicals, June 3, 2019
  • Country Risk Assessments Update: February 2019, Feb. 18, 2019
  • Industry Top Trends 2019: Chemicals, Nov. 13, 2018

This report does not constitute a rating action.

Primary Credit Analyst:Oliver Kroemker, Frankfurt (49) 69-33-999-160;
oliver.kroemker@spglobal.com
Secondary Contacts:Renato Panichi, Milan (39) 02-72111-215;
renato.panichi@spglobal.com
Paulina Grabowiec, London (44) 20-7176-7051;
paulina.grabowiec@spglobal.com
Gaetan Michel, Paris (33) 1-4420-6726;
gaetan.michel@spglobal.com
Lucas Hoenn, London + 44 20 7176 8597;
Lucas.Hoenn@spglobal.com
WEN LI, Frankfurt + 49 69 33999 101;
wen.li@spglobal.com
Additional Contact:Industrial Ratings Europe;
Corporate_Admin_London@spglobal.com

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