The latest information on the rating, including rating reports and related methodologies, is available on this LINK.

Rating action

Scope Ratings GmbH (Scope) has today affirmed its B-/Negative issuer rating on Hungarian metalworking company MetMax Europe Zrt. Concurrently, Scope has upgraded the debt instrument rating for the senior secured (guaranteed) bond (ISIN: HU0000360169) to B from B-, reflecting an improved expected recovery rate.

The full list of rating actions and rated entities is at the end of this rating action release.

Key rating drivers

Business risk profile: B (unchanged). MetMax’s business risk profile remains constrained by the company’s size, low product diversification and high customer concentration.

Despite another drop in 2024, profitability (as measured by the Scope-adjusted EBITDA margin*) in a peer group context remains the main support for MetMax’s business risk profile. That said, Scope’s overall profitability assessment is mitigated by high margin volatility in the last two years.

In 2024, the EBITDA margin declined significantly to around 11% from around 17% previously. This reflected both reduced cost coverage due to lower revenues and a further increase in personnel costs. Moreover, highly volatile demand at the individual technology/product level in 2024 made capacity planning, in particular headcount planning, difficult.

According to MetMax, several efficiency improvement projects (especially reduced headcount and the implementation of 1.7 MWp of photovoltaic power plants to cut energy costs) significantly improved profitability to around 20% in Q1 2025. MetMax also anticipates that profitability will be supported by a higher gross profit margin thanks to product portfolio changes. These changes are: i) the share of Knorr Bremse, with a below-average gross margin, is stable to decreasing compared to Siemens or Grundfos, with a 90% gross margin; ii) the decrease in batch sizes (due to fragmented demand and a diversified customer portfolio) automatically increases the gross margin as one-time set up costs (value added only) contribute to the order value to a greater extent than for large batch manufacturing; and iii) MetMax’s portfolio has been growing in complexity in recent years; increasingly complex parts generally have higher value added and therefore a higher gross margin component.

While these effects are likely to improve MetMax's profitability, the extent of the recovery remains unclear. Furthermore, after four years of declining profitability, Scope needs to see evidence that MetMax can turn things around and recover its EBITDA margin to 20%. At present, the rating agency anticipates that the EBITDA margin will recover to around 15.5% in 2025 and around 17% in 2026.

MetMax expects that the high fluctuation will normalise, but that overall demand will remain relatively low in 2025-26 due to the fragile global economic environment. In 2024, MetMax started serial production for GEA, Siemens and Bosch. The Siemens project in particular is expected to generate significant revenue from 2025 onwards; however, the pace at which these projects will be ramped up remains unclear. Consequently, Scope has maintained its revenue forecast, provided in November 2024, of around HUF 4.25bn in 2025 (up 11% YoY) and around HUF 4.7bn in 2026 (up 10% YoY). Alongside its profitability forecast, this leads to EBITDA estimates of around HUF 650m in 2025 and roughly HUF 805m in 2026.

Financial risk profile: B- (unchanged). MetMax’s financial risk profile reflects its weak credit metrics in 2025-26, as well as the unchanged inadequate liquidity, as the upcoming annual bond repayments, particularly those in 2026-27, lack sufficient security.

MetMax’s now senior secured (guaranteed) bond issued under the Hungarian Central Bank’s bond scheme has an accelerated repayment clause. The clause requires MetMax to repay the nominal amount (HUF 5bn) within 10 business days after the bond rating falls below B-, with a two-year grace period for a B/B- bond rating. Following the downgrade of the bond rating to B on 6 October 2023, MetMax entered the grace period, facing the threat of repayment acceleration in October 2025. In August 2025, MetMax announced a bondholder agreement that prevents repayment acceleration, with the following key terms:

• There is a waiver for achieving a B+ rating until 15 December 2027; however, any downgrade below B- will terminate the waiver.
   
• The minimum rating of B+ will only apply to the bond (i.e. the issuer’s rating will not be considered).
   
• There will be a DSRA account until the bond rating reaches a minimum level of B+. MetMax will deposit HUF 150m into this account at the end of each quarter to ensure a gradual accumulation of funds for bond payments (amortisation and interest).

In addition to the bond, MetMax’s reported financial debt of HUF 5.8bn at year-end 2024 comprised new debt issued in 2024: i) a new revolving credit line from Erste Bank in the amount of HUF 540m with indefinite maturity; and ii) a new five-year shareholder loan from MetMax Holding in the amount of HUF 307m. Due to the fixed term of this loan, no equity credit has been granted.

The subsidy of around HUF 1.75bn for the HUF 5.0bn investment programme is not included in debt due to the low probability of repayment. According to MetMax, it has recently signed an amendment to the subsidy contract with a monitoring period for the milestones beginning in 2026. This allows more time for current operating weaknesses to be overcome and demonstrates the supportive overall attitude of the Hungarian Investment Promotion Agency (HIPA) and the Hungarian state.

Scope calculates debt of HUF 5.85bn at YE 2024 vs. HUF 5.57bn at YE 2023. Leverage as measured by debt/EBITDA peaked at 14.3x in 2024, up from 6.8x in 2023, reflecting the dip in EBITDA. The redemption of the bond will start in 2025, with annual payments of HUF 500m between 2025 and 2029 and a final payment of HUF 2.5bn in 2030. Neither the loans raised from Erste Bank nor the shareholder loan foresee any obligatory repayments between 2025 and 2027. Moreover, based on the amended bond prospectus, payments under the shareholder loan can only be made if the EBITDA target of HUF 800m is met and a bond rating of B+ is achieved. Scope has not factored in any voluntary repayments and assumed that MetMax will make use of the HUF 200m guarantee provided by Vestin Trust, MetMax's ultimate majority owner. Scope expects debt of roughly HUF 5.5bn at YE 2025 and around HUF 5.0bn at YE 2026. The rating agency anticipates that debt/EBITDA will improve from its 2024 peak, but remain very weak at over 6x in 2025-26.

The interest coverage ratio decreased to around 2.0x in 2024 due to the dip in EBITDA, down from 4.0x in 2023. Scope calculates this ratio by looking at the ‘gross interest’ expense rather than ‘net interest’ due to intra-group charges. Based on the expected recovery in EBITDA, the rating agency projects interest cover improving towards 4.0x by 2026.

Free operating cash flow (FOCF) remained negative at around HUF -465m in 2024 (about HUF -215m in 2023). This was driven by the lower EBITDA and still-high capex from the execution of the HIPA programme. That said, Scope attributes the current weakness in FOCF entirely to the investment cycle. The rating agency notes that MetMax generates around HUF 900m in operating cash flow under normal conditions and that, despite the challenges of 2024, it achieved positive operating cash flow of around HUF 440m. Scope expects MetMax to significantly reduce capex following the completion of the HIPA programme in 2024, as the company plans to focus on cash preservation in the short term. Overall, the rating agency anticipates FOCF of roughly HUF 325m in 2025 and about HUF 435m in 2026. Given the scheduled bond repayments of HUF 500m per year between 2025 and 2029, Scope deems a cash flow cover (FOCF/debt) of over 10% necessary to internally cover the repayments. However, Scope anticipates a cash flow cover ratio of slightly below 10% in 2025-26. Sustained cash flow coverage of over 10% depends on revenue and profitability development, in addition to reducing capex, which is currently uncertain.

Liquidity: inadequate (unchanged). Although receiving an investor waiver to avoid bond repayment acceleration relieved immediate liquidity pressure, MetMax’s ability to cover the upcoming annual bond repayments of HUF 500m in 2026-27 depends on its ability to increase revenue and profitability, which is unsecure at this stage. Scope deems the repayment of the first bond tranche in December 2025 feasible based on i) cash on the balance sheet of HUF 91m at the end of December 2024; ii) projected FOCF; and iii) the HUF 200m guarantee provided by Vestin Trust, MetMax’s ultimate majority owner, to support any potential cash shortfalls. Scope notes positively that, apart from the annual bond repayments, MetMax has no other obligatory maturities until 2029.

Neither MetMax’s bond issued under the Hungarian Central Bank’s bond scheme nor its bank loans are subject to financial covenants.

Supplementary rating drivers: credit-neutral (unchanged). The rating does not incorporate any adjustments related to financial policy, peer group considerations, parent support or governance and structure.

The limitation on dividend payments, which allows dividends at the level of the parent company only if consolidated EBITDA exceeds HUF 800m, with only the amount exceeding HUF 800m being available for dividend payments, will remain in place after the prospectus amendment. In addition, a minimum B+ bond rating will be required prior to dividend payment.

Outlook and rating sensitivities

The Negative Outlook reflects ongoing economic uncertainty, which may prevent the expected recovery in EBITDA given MetMax’s vulnerable business model (high customer and product concentration). Associated risks are increasing, as MetMax's ability to repay the scheduled annual bond tranches of HUF 500m in 2026-27 largely depends on improved cash flow coverage to over 10%, which may not be achieved.

The upside scenarios for the ratings and Outlook are (individually):

1. FOCF/debt improving to above 10% on a sustained basis
    
2. Greater certainty regarding upcoming bond repayments, e.g. through a cash injection

The downside scenarios for the ratings and Outlook are (individually):

1. FOCF/debt remaining below 10% on a sustained basis
    
2. Rising concerns on liquidity constraints

Debt rating

Scope has upgraded the debt instrument rating on the HUF 5.0bn senior secured (guaranteed) bond (ISIN: HU0000360169) to B, one notch above the issuer rating.

In December 2020, MetMax issued a HUF 5.0bn senior unsecured (guaranteed) bond through the Hungarian Central Bank’s Bond Funding for Growth Scheme. The bond’s tenor is 10 years, with a fixed coupon rate of 3.0% and repayment in six tranches of 10% in 2025, 2026, 2027, 2028 and 2029 and of 50% in 2030. The bond has been issued with a guarantee from MetMax Holding Kft., its parent company.

Based on the amended bond prospectus, the bond has become asset backed in nature. A second-ranking mortgage on the manufacturing site property has been established (HIPA/Hungarian state is first ranked) and a first-ranking mortgage/pledge on the other property (PV power plant II.) plus other assets and receivables. In addition to the bond, the HUF 540m revolving credit line provided by Erste Bank is secured by a first-ranking mortgage/pledge on the receivables, some machinery and suretyship from MetMax Holding. The new shareholder loan raised in 2024 in the amount of HUF 307m and any funds raised through the guarantee provided by Vestin Trust are subordinated to the bond.

Considering the new collateral structure, Scope’s recovery analysis indicates an above average recovery for the senior secured (guaranteed) bond, translating into a debt instrument rating which is one notch above the issuer level. Scope’s recovery analysis assumes that the intra-group receivable from the parent (used to refinance acquisition debt) would become non-recoverable in the event of a payment default. The guarantee provided by MetMax Holding Kft. has no impact on the expected recovery of the debt instrument.

Environmental, social and governance (ESG) factors

Overall, ESG factors have no immediate impact on this credit rating action.

However, from a governance perspective, Scope still sees high key person risk, as MetMax’s business continues to depend on András Csoma, the CEO and majority owner (54%). However, the rating agency has a positive view on the transformation of the operational side of the organisation in general and the expansion of management in particular.

All rating actions and rated entities

MetMax Europe Zrt.

Issuer rating: B-/Negative, affirmation

Senior secured (guaranteed) bond rating: B, upgrade

*All credit metrics refer to Scope-adjusted figures.

Stress testing & cash flow analysis
No stress testing was performed. Scope Ratings performed its standard cash flow forecasting for the company.

Methodology
The methodology used for these Credit Ratings and Outlook, (General Corporate Rating Methodology, 14 February 2025), is available on scoperatings.com/governance-and-policies/rating-governance/methodologies.
Information on the meaning of each Credit Rating category, including definitions of default, recoveries, Outlooks and Under Review, can be viewed in ‘Rating Definitions – Credit Ratings, Ancillary and Other Services’, published on scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Historical default rates of the entities rated by Scope Ratings can be viewed in the Credit Rating performance report at scoperatings.com/governance-and-policies/regulatory/eu-regulation. Also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): registers.esma.europa.eu/cerep-publication/. A comprehensive clarification of Scope Ratings’ definitions of default and Credit Rating notations can be found at scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Guidance and information on how environmental, social or governance factors (ESG factors) are incorporated into the Credit Rating can be found in the respective sections of the methodologies or guidance documents provided on scoperatings.com/governance-and-policies/rating-governance/methodologies.
The Outlook indicates the most likely direction of the Credit Ratings if the Credit Ratings were to change within the next 12 to 18 months.

Solicitation, key sources and quality of information
The Credit Ratings were not requested by the Rated Entity or its Related Third Parties. The Credit Rating process was conducted:
With the Rated Entity or Related Third Party participation   YES
With access to internal documents                                       YES
With access to management                                                 YES
The following substantially material sources of information were used to prepare the Credit Ratings: public domain, the Rated Entity and Scope Ratings' internal sources.
Scope Ratings considers the quality of information available to Scope Ratings on the Rated Entity or instrument to be satisfactory. The information and data supporting these Credit Ratings originate from sources Scope Ratings considers to be reliable and accurate. Scope Ratings does not, however, independently verify the reliability and accuracy of the information and data.
Prior to the issuance of the Credit Rating action, the Rated Entity was given the opportunity to review the Credit Ratings and Outlook and the principal grounds on which the Credit Ratings and Outlook are based. Following that review, the Credit Ratings and Outlook were not amended before being issued.

Regulatory disclosures
These Credit Ratings and Outlook are issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0. The Credit Ratings and Outlook are UK-endorsed.
Lead analyst: Gennadij Kremer, Director
Person responsible for approval of the Credit Ratings: Sebastian Zank, Managing Director
The Credit Ratings/Outlook were first released by Scope Ratings on 27 October 2020. The Credit Ratings/Outlook were last updated on 7 November 2024.

Potential conflicts
See scoperatings.com under Governance & Policies/Regulatory for a list of potential conflicts of interest disclosures related to the issuance of Credit Ratings, as well as a list of Ancillary Services and certain non-Credit Rating Agency services provided to Rated Entities and/or Related Third Parties.

Conditions of use/exclusion of liability
© 2025 Scope SE & Co. KGaA and all its subsidiaries including Scope Ratings GmbH, Scope Ratings UK Limited, Scope Fund Analysis GmbH, Scope Innovation Lab GmbH and Scope ESG Analysis GmbH (collectively, Scope). All rights reserved. The information and data supporting Scope’s ratings, rating reports, rating opinions and related research and credit opinions originate from sources Scope considers to be reliable and accurate. Scope does not, however, independently verify the reliability and accuracy of the information and data. Scope’s ratings, rating reports, rating opinions, or related research and credit opinions are provided ‘as is’ without any representation or warranty of any kind. In no circumstance shall Scope or its directors, officers, employees and other representatives be liable to any party for any direct, indirect, incidental or other damages, expenses of any kind, or losses arising from any use of Scope’s ratings, rating reports, rating opinions, related research or credit opinions. Ratings and other related credit opinions issued by Scope are, and have to be viewed by any party as, opinions on relative credit risk and not a statement of fact or recommendation to purchase, hold or sell securities. Past performance does not necessarily predict future results. Any report issued by Scope is not a prospectus or similar document related to a debt security or issuing entity. Scope issues credit ratings and related research and opinions with the understanding and expectation that parties using them will assess independently the suitability of each security for investment or transaction purposes. Scope’s credit ratings address relative credit risk, they do not address other risks such as market, liquidity, legal, or volatility. The information and data included herein is protected by copyright and other laws. To reproduce, transmit, transfer, disseminate, translate, resell, or store for subsequent use for any such purpose the information and data contained herein, contact Scope Ratings GmbH at Lennéstraße 5, D-10785 Berlin. Public Ratings are generally accessible to the public. Subscription Ratings and Private Ratings are confidential and may not be shared with any unauthorised third party.