S&P Raises Eletromidia’s Rating to ‘brAA’
Rating is a grade assigned by a credit rating agency to a company or debt issuance, indicating the credit quality of the issuer. A higher rating signifies lower risk of defaulting on payments. Ratings are represented by letters on a scale ranging from ‘AAA’ (highest) to ‘D’ (default). This grade assesses the issuer’s capacity and willingness to fully and timely meet its obligations to creditors.
Recently, S&P Global Ratings raised the corporate credit rating of Eletromidia from ‘brA+’ to ‘brAA-‘ on the national scale. This upgrade also applies to the company’s 5th debenture issuance.
Eletromidia announced its recent 5th debenture issuance, with proceeds intended for prepaying current gross debt, enhancing its debt maturity profile, and providing greater financial flexibility to pursue expansion plans in the coming years. Additionally, the company has reported strong operational results in recent quarters, driven by expanding its display network and leveraging existing assets. Increased scale has led to improved profitability and stronger credit metrics. Over the last 12 months ending March 31, 2024, Eletromidia reported a net revenue of R$ 993.8 million, an EBITDA margin of 37.9%, and a gross debt to EBITDA ratio of 2.2x, compared to 34.9% and 2.8x, respectively, in the same period the previous year.
As a result, on June 6, 2024, S&P Global Ratings upgraded Eletromidia’s corporate credit rating from ‘brA+’ to ‘brAA-‘ on the Brazil National Scale. Simultaneously, the 5th senior unsecured debenture issuance received a ‘brAA-‘ rating with a ‘3’ recovery rating, indicating a significant recovery expectation (50%-70%; rounded estimate: 65%) for creditors in a hypothetical default scenario. The stable outlook on the issuer rating reflects expectations of continued company scale expansion in the coming years, supporting higher profitability gains, and maintaining comfortable leverage and liquidity levels.
Eletromidia has benefited from positive outlooks in the out-of-home (OOH) media segment in Brazil, supporting its continued operational expansion in line with expectations. This performance is mainly driven by leveraging the potential of its existing display network: while the number of displays grew by 4.6%, influenced by occasional relocations in shopping areas, the company reported a 20.4% increase in gross revenue over the 12 months ending March 31, 2024, reaching R$ 1.1 billion.
The stable outlook reflects expectations that Eletromidia will continue to deliver solid revenue growth in the coming years, driven by successful integration of recent acquisitions and positive prospects in the Brazilian OOH media sector. The company is expected to continue investing in organic growth while potentially seeking strategic acquisitions to further strengthen its presence in the national market. In such a scenario, consistent profitability improvement is projected while maintaining controlled leverage and adequate liquidity position.
Date: 06/07/2024
By: Eletromidia S.A.
