OREANDA-NEWS. HMS Group (LSE: HMSG) announces today that Fitch Ratings assigns JSC HMS Group (legal entity, the holder of HMS Group’s assets, located in Russia) a first time Foreign and Local Currency Issuer Default Rating (IDR) of “B+”, the outlook “Stable”.

In its press-release the rating agency specifies the following key rating drivers:

  • Strong market position: The company is the market leader in Russia in two of its three main business segments – pumps and oil & gas equipment;
  • Oil production resilience expected: Fitch’s base case assumes that Russia’s current oil production levels will be maintained and that Russia will remain a key global exporter of crude and oil products;
  • No foreign exchange exposure: The company is not exposed to FX rate risk, as all debt, revenues and costs are denominated in Russian roubles;
  • Compressor business more volatile: According to the agency, the volatility of this business is likely to be high due to its high exposure to large contracts, but currently this is not a concern given the fairly small contribution of the segment to HMS’ revenues;
  • Share of aftermarket services low: These services contribute to a very low proportion of revenues due to the fact that customers usually have their own maintenance service divisions.

Fitch views the liquidity position of HMS Group as adequate.

Mr. Artem Molchanov, Managing Director (CEO) of HMS Group, commented:

“ We are pleased that Fitch appraised strong sides of the company, our leading market position and a healthy level of margins and leverage. Our good relationships with Russia’s top banks allow us to have a diversified credit portfolio and an easy-to-handle debt repayment schedule. The management is committed to maintaining Net debt/EBITDA LTM at the level lower than 2.5x. We will follow our conservative financial policy going forward.”