FITCH RATINGS increased the long-term national rating for Gerdau Metaldom, S.A from A-(dom) to “A(dom) with “Stable” projections, and confirmed the short-term ratings under “F1(dom)”.
As explained by the agency, the grading shares create process-derived synergies, by combining the operations of Gerdau Metaldom with those of the Complejo Metalúrgido Dominicano, S.A (Metaldom) effective the final quarter of 2014.
“That and the higher levels reached prevailed around a more efficient cost structure, which thus allows to strengthen the operational generation capacity and the company’s position to face a challenging environment of low-price cycles, and competitive pressure within fair trade practices”, Fitch added.
Likewise, the scores incorporate a conservative capital structure and its expectations to prevail. In compensation, Fitch noted that these are limited by the cycle nature of the business in which the company partakes, competitive pressure by imported products and the limited geographic expansion of its operation.
SOLID COMPETITIVE POSITION
As exposed by Fitch, Gerdau Metaldom strengthened its competitive position effective the moment it merged its operations with Metaldom. The integrated corporation rendered a setup capacity of 1.2million metric tonnes, which allows to cover close to 80% of the national demand.
Despite that, it reported adverse market conditions, resulting from competitive pressure on behalf of imported products from China and Europe at lower prices, thus limiting its exports, geographic expansion and use of its setup capacity. The company exports to the Caribbean nations, where it has competitive advantages because of its geographic location and capacity to offer retail volume demanded by these markets.
About Gerdau Metaldom:
It is the first multinational company in the steelworks sector of the Dominican Republic, with important market share in several Central American and Caribbean countries, such as Costa Rica, Puerto Rico, Haiti, Jamaica and others.
The company hosts three facilities in Santo Domingo, with a setup capacity of one million metric tonnes for lamination of steel bars. It produces bars -long and flat- for the civil construction, industrial, agribusiness sectors, and operates in PVC and metallic products.
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