Page 84 - TURKRptAug20

Moody’s Investors Services rates the company at B1/Negative, four notches below investment grade, in parallel with Turkey’s sovereign rating.
Fitch's rating case includes expectations for a significant global economic downturn throughout 2Q20, followed by a gradual recovery towards the end of 2020 and into 2021.
Under this scenario, Fitch expects that short to medium-term profitability will suffer in a number of Sisecam's end markets, including automotive, construction and white goods.
Fitch forecasts that Sisecam's EBITDA margin will fall to 17.6% at end 2020 from 20.7% at end 2019.
Fitch predicts that Sisecam will continue its investments in the US with its JV partner Ciner, to build a soda ash plant in Wyoming US in line with its geographic diversification plans, which has historically been a rating constraint.
Fitch views the change in the organisational structure, where Sisecam will merge its operating subsidiaries under the HoldCo (Turkiye Sise ve Cam Fabrikalari), as rating neutral.
Sisecam has exposure to both cyclical (autos/construction/white goods) and defensive sectors (food & beverage/consumer goods).
FX exposure on Sisecam's balance sheet is limited, but the company's income statement has moderate exposure to FX movements.
Operational and strategic ties between Sisecam and owner Isbank (B+/Negative) are weak enough to rate Sisecam on a standalone basis. This reflects Fitch's general approach towards Turkish banks and their industrial subsidiaries.
Sisecam has leading market positions in key markets such as Turkey, Russia and Eastern Europe and a low cost base, leading to a strong profitability and funds from operations (FFO) generation.
Sisecam's FFO margin was 18.0% at year-end 2019 compared with 7.0% for Saint-Gobain and 7.5% for Arcelik (BB/ Stable).
Sisecam is significantly smaller in size, has limited diversification and higher exposure to emerging markets compared with European rated peers such as Saint-Gobain and Arcelik.
Fitch forecasts Sisecam’s revenues to decline by 22% in 2021 and a dividend pay-out ratio of 17% from net profit.
On May 29, Sisecam (3% dividend yield) and its subsidiaries Soda Sanayi (SODA) (4%), Anadolu Cam (ANACM) (3%), Trakya Cam (TRKCM) (3%) paid cash dividends.
In September this year, Sisecam plans to complete the merger process of its Borsa Istanbul-listed subsidiaries Soda Sanayi, Anadolu Cam, Trakya Cam and Denizli Cam (DENCM) and non-listed Pasabahce under Sisecam’s roof. Sisecam, established in 1935 by Isbank on the order of Ataturk, operates in flat glass, glassware, glass packaging and chemical businesses with a total of 43 production facilities – 16 local and 27 abroad – with 22,000 employees. International sales constitute 60% of the group’s total sales. Sisecam is the third-largest glassware, fourth-largest glass packaging and fifth-largest flat glass manufacturer in the world in terms of production capacity. The company is 75%-owned by Isbank, one of Turkey’s largest private lenders, and Isbank subsidiaries, while 25% of its shares are in free float.
84​ TURKEY Country Report​ August 2020 ​ ​www.intellinews.com