The upgrade is supported firstly by better-than-expected operating performance, leading to improved credit metrics as input prices normalise, and secondly by debt reduction as Vajda-Papír consolidates its sister company, Vajda-Papír Scandinavia AS.

The improved Outlook reflects Scope’s view that favourable market conditions paired with sound initiatives have led to recovering profitability and credit metrics.

A deterioration in the financial risk profile drives the rating action as rising prices for cellulose and energy have weakened operational profitability and caused an increased need for working capital financing, negatively impacting credit metrics.

The rating affirmation reflects a still comparatively strong business risk profile and improving credit metrics following a deterioration driven by unfavourable market developments in cellulose and energy prices.

Scope also affirms the company's senior unsecured debt at B+, reflecting the new, proposed bond and confirmed start of the Phase II expansion plan.

The Outlook change is primarily driven by the already delayed refinancing and anticipated acceleration of Phase II investment plans. Improvements in sales volumes and operations during 2020 are factors supporting the rating.