--Foreign currency Issuer Default Rating (IDR) at 'BB+';
--Local currency IDR at 'BB+';
--6.5% senior unsecured notes due 2015 at 'BB+';
--7.875% senior unsecured notes due 2019 at 'BB+'.
The Rating Outlook is revised to Stable from Positive.
The Outlook revision reflects recent EBITDA declines associated with a competitive environment and weak demand in
Mabe's ratings reflect its geographic diversification and strong business position across all markets where it has a presence which in turn has allowed it to maintain revenue growth and solid pricing power. The ratings continue to be supported by the company's long-term relationship and joint venture with General Electric (GE), which provides access to joint development of products and services, as well as efficiencies in the supply chain. Mabe's ratings are tempered by a highly competitive environment, exposure to commodity prices and foreign exchange volatility as well by its leverage levels and poor cash flow generation in the last few years as a result of reorganization charges and expenses.
KEY RATING DRIVERS
Higher Profitability in a Challenging Environment
Fitch expects Mabe's results to improve given higher profitability as a result of the deconsolidation of
Strong Market Position
Mabe holds a strong business position in most of the Latin American markets in which it is present. The company has 14 manufacturing facilities located in
Long-Term Relationship with GE
Mabe's ratings continue to be supported by the long-term relationship with GE. The company signed a 10-year agreement with GE in 2012 for the production of dryers in its
Leverage Expected to Stabilize in 2014
Fitch believes gross leverage will likely stabilize in 2014 at around 3.0x and will decline modestly in 2015 as scheduled debt amortizations along with reductions in financing costs and in non-recurring reorganizational charges take place. Fitch also expects the company will use cash flows to support capex of approximately
Adequate Liquidity and Extended Debt Maturity Profile
The company's total debt was
Future developments that may, individually or collectively, lead to a negative rating action include:
Large debt-financed acquisitions, deterioration in profitability and cash flow generation from lower demand, competitive and/or input cost pressures, resulting in the expectation of gross leverage levels consistently above 3.0x.
Future developments that may, individually or collectively, lead to a positive rating action include:
A firm management commitment to maintain total debt-to-EBITDA at or below 2.5x in the mid- to long-term, in conjunction with robust cash flow generation, stable profitability and strong liquidity.
Additional information is available at 'www.fitchratings.com'.
--'Corporate Rating Methodology' (
Corporate Rating Methodology: Including Short-Term Ratings and Parent and Subsidiary Linkage
Alberto Moreno, +52 81-8399-9100
Source: Fitch Ratings
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