The Outlook revision to Negative reflects refinancing risks tied to the senior unsecured bond’s amortization schedule, as well as the potential for sustained pressure on credit metrics should market recovery be further delayed.

The downgrade is driven by the slower-than-expected recovery of the Hungarian construction market as Stavmat’s operating profitability continues to decline in 2024, putting further pressure on credit metrics.

The Negative Outlook reflects weaker operating profitability and credit metrics due to the strong price competition in a more challenging macroeconomic environment.

The changed Outlook reflects Scope’s view that Stavmat’s financial policy has not become less aggressive following its announcement of a new business plan involving further site acquisitions financed mostly by a HUF 3.2bn loan.

The rating affirmation reflects continued growth paired with stable debt levels. The Outlook change incorporates Scope’s view of a less aggressive financial policy.

The rating reflects the limited size and diversification, dependent on the local construction business cycle. However, a leading local market position, solid liquidity and adequate financial metrics amid the planned bond issuance are credit strengths.