Scope has completed a monitoring review for Nitrogenmuvek Zrt.
      TUESDAY, 30/05/2023 - Scope Ratings GmbH
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      Scope has completed a monitoring review for Nitrogenmuvek Zrt.

      The periodic review has resulted in no rating action.

      Scope Ratings GmbH (Scope) monitors and reviews its credit ratings on an ongoing basis and at least annually, or every six months in the case of sovereigns, sub-sovereigns and supranational organisations. 

      Scope performs monitoring reviews to determine whether material changes and/or changes in macroeconomic or financial market conditions could have an impact on the credit ratings. Scope considers all available and relevant information when undertaking the monitoring review, the audited financials for 2022 were not available at the time of preparing the monitoring review and as such the assessment was based on preliminary figures.

      Monitoring reviews are conducted by performing a peer comparison, benchmarking against the rating-change drivers, and/or reviewing the credit ratings’ performance over time, as deemed appropriate by the Lead Analyst or Analytical Team Head, in addition to an assessment of all aspects of the relevant methodology/ies, including key rating assumptions and model(s). Scope publicly announces the completion of each monitoring review on its website.

      Scope completed the monitoring review for Nitrogenmuvek Zrt. (issuer rating: BB-/Stable, senior unsecured debt rating: BB-) on 24th May 2023.

      This monitoring note does not constitute a credit rating action, nor does it indicate the likelihood that Scope will conduct a credit rating action in the short term. Information about the latest credit rating action connected with this monitoring note along with the associated rating history can be found on

      Key rating factors

      Nitrogenmuvek’s business risk profile continues to be characterised by its position as the sole producer of nitrogen fertilisers in Hungary and its solid position in other countries in Central and Eastern Europe. In this region, the company’s position is supported by its Genezis partner network, as well as trading activities that allow it to leverage on existing business with farmers. However, its limited scale (sales of around EUR 500m) in relation to those of integrated chemical companies globally, fertiliser companies in particular, remains hampering its market position. In addition, weak diversification remains holding back Nitrogenmuvek’s business risk profile. Worth mentioning in this regard is the single production site, product concentration on nitrogen fertilisers, particularly calcium ammonium nitrate, which are sold in one end-market, and the overall modest contribution of specialty chemical products to sales. Despite its volatility, the EBITDA margin remains credit-positive, averaging 18% during 2010-2022.

      Regarding the fine imposed by the Hungarian Office of Economic Competition for cartel activity, Nitrogenmuvek Zrt. appealed the decision but, through ongoing legal proceedings, has recognised a long-term liability of HUF 7.1bn for its share of the fine, with HUF 1.451m already paid. In its base case, Scope anticipates that Nitrogenmuvek's credit metrics will remain strong, even if the HUF 7.1bn payment occurs in 2023, which is contingent upon the progress of the legal proceedings and may extend beyond 2023.

      In addition, natural gas price increases resulting from the conflict between Russia and Ukraine, higher logistics costs, and a temporary halt in its ammonia production in 2022 negatively impacted Nitrogenmuvek. On the positive side, the conflict led to a shortage and surge in nitrogen fertiliser prices. The company thus improved its EBITDA to HUF 41bn despite selling lower volumes. Scope does not believe that the situation is sustainable and the first signs of that were seen with funds from operations taking a hit with much lower advance payments from clients at the end of 2022. However, Scope expects the situation to stabilise in 2023. Nitrogenmuvek recently contracted and fully drawn down a working capital RCF in the amount of EUR 15m.

      The methodologies applicable for the reviewed rating and/or rating Outlook (General Corporate Rating Methodology, 15 July 2022; Chemicals Rating Methodology, 17 April 2023) are available on
      This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0
      Lead analyst Ivan Castro Campos, Director

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