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FITCH RATINGS

27.02.2025 27.02.2025 215

JOINT STOCK COMPANY “UZBEK METALLURGICAL PLANT” ANNOUNCES THAT THE INTERNATIONAL RATING AGENCY FITCH RATINGS HAS REVISED ITS LONG-TERM ISSUER DEFAULT RATING FROM "BB-" TO "B+" WITH THE OUTLOOK UPGRADED FROM "NEGATIVE" TO "STABLE"

Joint Stock Company “Uzbek Metallurgical Plant” (RSE: UZMK) (hereinafter - Uzmetkombinat JSC, the “Company”), a leading producer of ferrous metallurgy products in Uzbekistan, announces that Fitch Ratings (hereinafter – the “Agency”) has revised its Long-term Issuer Default Rating from 'BB-' to ‘B+’ with the outlook upgraded from “Negative” to “Stable”.

According to the Fitch Ratings report, the revision of the rating is mainly attributed to the leverage levels above the Agency’s thresholds persisting longer than Fitch Ratings previously expected which was primarily due to the weak market conditions in the global steel industry. In 2024-2025 amid unfavorable market environment a number of steel companies around the globe experienced credit ratings and outlooks downgrades. In 2025 the international rating agency Moody’s Ratings downgraded long-term credit ratings of Brazilian Companhia Siderurgica Nacional together with its subsidiaries CSN Inova Ventures and CSN Resources S.A. from “Ba2” to “Ba3” with outlooks revised from “Negative” to “Stable”. The same rating action was prior taken by the international rating agency S&P Global Ratings which in December 2024 downgraded Brazilian Companhia Siderurgica Nacional from “BB” to “BB-” with outlook revised from “Negative” to “Stable”. In 2024 companies based in China, namely Taiyuan Iron & Steel (Fitch Ratings: A), Baowu Steel Group Corporation Limited (Fitch Ratings: A+) together with its subsidiary Baoshan Iron & Steel Co. Ltd. (Fitch Ratings: A+) as well as Indian Tata Steel Limited (Fitch Ratings: BBB-), experienced downgrades of their credit outlooks from “Stable” to “Negative”. In December 2024 a Chinese company Guangyang Antai (Fitch Ratings: B, Stable prior to December 06, 2024) made a decision to stop participating in the rating processes which led to the withdrawal of its credit rating.

Currently, Uzmetkombinat JSC is at the final stage of realization of its strategic project of the construction of Casting and Rolling Complex (hereinafter – the “Project”), the implementation progress of which, despite negative market factors, was upgraded during 2024 from 65 to over 90%. The Project will double the total capacity of finished products to 2.1 mln tons per year and the Complex itself is expected to be commissioned in the second quarter of 2025, which, according to Fitch Ratings' expectations, will lead to a significant reduction in the Company's debt burden already in 2026 to 3.4x and, subsequently, to below 3.0x in 2027. The Agency notes that execution risks around the Project have decreased given its high completion rate exceeding 90%. According to the Agency, thanks to the Project the Company will become the country's sole large producer of flat steel products, replacing imports. In addition to the Casting and Rolling Complex, Uzmetkombinat JSC is now implementing other investment projects that, pursuant to the Company’s estimates, will increase its production capacity, as well as diversify its resource base. Among such projects are the “Construction of New Grinding Ball line with annual capacity of 500,000 tons”, the “Construction of DRI production line with annual capacity of 990,000 tons” and other.

According to the Fitch Ratings report, a steady decline in the Total Debt/EBITDA ratio along with the scale increase due to the successful Project completion, improved liquidity, as well as strengthening ties with Uzbekistan could lead to a positive rating action/upgrade.

For more information, please visit the official Fitch Ratings website via https://www.fitchratings.com/research/corporate-finance/fitch-downgrades-uzbek-metallurgical-plant-idr-to-b-stable-outlook-26-02-2025

Reference: Fitch Ratings is one of the three leading international rating agencies, along with Moody's and Standard & Poors. It was founded in 1913 and is headquartered in New York State (USA).

Note:

JSC Uzmetkombinat (JSC UZMK) is the leader of ferrous metallurgy in Uzbekistan, counting its history from 1944. Its manufacturing plant has an installed annual capacity of more than 1 million tons of rolled products and is implementing a large-scale investment program to increase capacity to 2.2 million tons per year during 2021-2026. The enterprise employs more than 10,000 people. Its products are sold in all regions of the country and are exported to various countries of the world, including Europe. More than 90% of the company's shares are owned by the Uzbekistan state. A significant portion of the company’s shares is traded on RSE “Toshkent”. Common and preferred shares of the company have the status of highly liquid.

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