BAKU, Azerbaijan, October 11. The EBITDA margin of the Petkim Petrokimya Holdings, the subsidiary of State Oil Company of Azerbaijan (SOCAR) in Türkiye, will restore to 11 percent in coming years, Fitch Ratings forecasts, Trend reports via the latest rating update from the agency.
“We expect EBITDA margin to fall to around 9 percent in 2022 and to around 6 percent in 2023. Economic recovery should restore EBITDA margin to around 11 percent in 2024-2025,” the report said.
According to Fitch Ratings, almost 90 percent of Petkim’s production costs, or 80-85 percent of total cash costs, are dominated in US dollar, as the main raw material, naphtha, is purchased at US dollar. At the same time, most of the sales are denominated directly in US dollar and euros, or indirectly driven by the indexation of prices in lira to global US dollar benchmarks.
“This supports Petkim's EBITDA during periods of lira devaluation. FX volatility could also have indirect implications by weakening domestic demand, although Petkim can choose to re-route its products to export markets,” the agency noted.
The going-concern EBITDA is estimated at $220 million. This reflects Petkim’s moderate recovery from the downturn and the benefits of synergy with the STAR refinery.
“STAR Refinery, which was launched in late 2018 by SOCAR next to Petkim's plants in Türkiye, now operates at its 11 million tons full capacity p.a. and supplies around 80-90 percent of Petkim's naphtha feedstock. As a result, Petkim generates around $30-40 million logistics cost savings annually,” Fitch Ratings added.
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