GCR AFFIRMS POSITIVE RATING ON DANGOTE REFINERY
- Rating Confirmation:
- GCR Ratings has affirmed Dangote Industries Limited’s (DIL) national-scale long-term issuer rating at AA+ and short-term issuer rating at A1+.
- Bond Ratings:
- The national scale long-term issue ratings of AA+(NG) were confirmed for Dangote Industries Funding Plc’s series 1 N10.5 billion tranche A, N177.1 billion tranche B bonds, and series 2 N112.4 billion senior unsecured bond.
- Outlook Revision:
- The outlook on these ratings has been revised from stable to evolving, reflecting expected significant growth in earnings from the new petrochemical refinery.
- Impact of Naira Devaluation:
- GCR noted the negative impact of naira devaluation on DIL's performance, particularly affecting profitability due to significant foreign debt exposure.
- Growth Prospects:
- The ratings are supported by the anticipated earnings boost from the commencement of refining operations in February 2024, producing diesel, naphtha, heavy fuel oil, and aviation fuel.
- The refinery is set to become a major contributor, with potential strong export sales, particularly to Europe.
- Diversification and Business Profile:
- The group’s diversified business profile is bolstered by the new refinery, complementing existing operations.
- Non-oil businesses continue to show strong earnings capacity and market leadership.
- Challenges and Exposure:
- DIL remains vulnerable to volatile energy costs and relies on imports for key inputs like gypsum, raw sugar, and crude oil.
- Peer Comparison:
- GCR has maintained a positive comparison for DIL due to the refinery's importance to the Nigerian economy, though support factors are expected to lead to significant improvements in the group’s business and financial profiles.
- Rating Confirmation:
- GCR Ratings has affirmed Dangote Industries Limited’s (DIL) national-scale long-term issuer rating at AA+ and short-term issuer rating at A1+.
- Bond Ratings:
- The national scale long-term issue ratings of AA+(NG) were confirmed for Dangote Industries Funding Plc’s series 1 N10.5 billion tranche A, N177.1 billion tranche B bonds, and series 2 N112.4 billion senior unsecured bond.
- Outlook Revision:
- The outlook on these ratings has been revised from stable to evolving, reflecting expected significant growth in earnings from the new petrochemical refinery.
- Impact of Naira Devaluation:
- GCR noted the negative impact of naira devaluation on DIL's performance, particularly affecting profitability due to significant foreign debt exposure.
- Growth Prospects:
- The ratings are supported by the anticipated earnings boost from the commencement of refining operations in February 2024, producing diesel, naphtha, heavy fuel oil, and aviation fuel.
- The refinery is set to become a major contributor, with potential strong export sales, particularly to Europe.
- Diversification and Business Profile:
- The group’s diversified business profile is bolstered by the new refinery, complementing existing operations.
- Non-oil businesses continue to show strong earnings capacity and market leadership.
- Challenges and Exposure:
- DIL remains vulnerable to volatile energy costs and relies on imports for key inputs like gypsum, raw sugar, and crude oil.
- Peer Comparison:
- GCR has maintained a positive comparison for DIL due to the refinery's importance to the Nigerian economy, though support factors are expected to lead to significant improvements in the group’s business and financial profiles.