Ekotechnika GmbH rated B (outlook: stable) by Creditreform

Ekotechnika GmbH rated B (outlook: stable) by Creditreform

6 March 2014 Corporate News

Walldorf, 6 March 2014 – In the context of the annual follow-up rating, Creditreform Rating AG has adjusted the corporate rating of Ekotechnika GmbH to B (outlook: stable) (previously B+). Ekotechnika is the German holding company of the Ekoniva Technika Group, the largest dealer of international agricultural machinery in Russia. The new rating confirms that the Group’s creditworthiness remains adequate. The follow-up rating is based on the figures for the past fiscal year 2012/2013 (30 Sept.).

In their report, the rating analysts highlight the continued clearly positive revenue trend and the stable earnings quality. Negative aspects include the exchange rate effects weighing on the bottom line and the resulting weak equity capitalisation.

The depreciation of the rouble has both positive and negative effects for Ekotechnika. Agricultural machinery is sold in US dollar prices, which are converted into roubles at the exchange rate on the day of payment. This means that the depreciation of the rouble leads to rising sales revenues. Another positive effect of the depreciation is the reduction in rouble-denominated liabilities and operating expenses incurred in roubles. By contrast, negative effects in the Group’s euro balance sheet relate to inventories, whose value declines - similar to rouble-denominated liabilities - because of the weak rouble as well as to euro-denominated liabilities, whose financing costs increase.

Says Wolfgang Bläsi, Managing Director of Ekotechnika GmbH: “We are cautiously optimistic for our operating activities in the current year. Orders on hand have shown a positive trend in the first few months, and operating costs are below the prior year level. We now need to cut inventories in order to bring about a sustained reduction in financing costs. This will also reduce our exposure to exchange rates. Russia’s agricultural sector continues to offer huge opportunities, and we believe that the current political crisis in Crimea will not affect our business.”