GCR Ratings has affirmed Dangote Industries Limited with national-scale long-term and short-term issuer ratings of AA+ and A1+, respectively.
In a recent report, GCR affirmed the national scale long-term issue rating of AA+(NG) to each of Dangote Industries Funding Plc’s series 1 N10.5 billion tranche A and N177.1 billion tranche B bonds and series 2 N112.4 billion senior unsecured bond.
According to the agency, the outlook on the ratings has been revised from stable to evolving.
The rating firm, however, decried the impact of naira devaluation on the performance of DIL.
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“The ratings were affirmed on the prospects of significant growth in earnings following the commencement of operations at the new petrochemical refinery and robust earnings expectation from the other businesses,” the agency said.
“The ratings are constrained by the adverse impact of the currency devaluation on the profitability and financial position of the group, given its significant foreign debt exposure.
“The group’s business profile is bolstered by the commencement of refining operations in February 2024 (with the production of diesel, Naphtha, heavy fuel oil, and aviation fuel), which now complements the already well-diversified group businesses.
“Accordingly, we expect the group’s business fundamentals to become increasingly tilted towards oil refining, given its size as the largest refinery in Africa and Europe.
“We also expect strong export sales potential given the recent debut exports of refined oil to Europe.
“The non-oil businesses continue to demonstrate strong earnings-generating capacity and market leaderships in their respective sectors, underpinned by the above-peer production capacities and favourable demographics.
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“We have maintained a positive peer comparison consideration for DIL underpinned by the importance of the refinery to the Nigerian economy.”
The rating agency further said it lowered the extent of support applicable under “this rating component because we expect the support factors to translate to substantive enhancements to the group’s business and financial profiles over the outlook period”.
GCR, however, said DIL remains highly exposed to volatile energy cost dynamics and is reliant on the importation of gypsum for cement, raw sugar input, and crude oil for the refinery.
