Fitch Ratings – Sydney – 21 Feb 2023: Fitch Ratings has upgraded Australia-based Emeco Holdings Limited’s Long-Term Issuer Default Rating (IDR) to ‘BB-‘ from ‘B+’. The Outlook is Stable. The upgrade reflects the improvement in Emeco’s revenue visibility and defensibility, through diversifying its service offerings, increasing contract tenures, and improving its customer and commodity diversification. The rating also incorporates the benefits that the reduction in the cost base and more flexible fleet and cost structure provide – particularly in the more cyclical mining services industry. The Stable Outlook reflects our expectation that Emeco will maintain a conservative financial profile, with EBITDA net leverage remaining below 1x through the cycle. It also recognises that the company has addressed underperformance in a few contracts. Further, Fitch believes that Emeco is well-positioned to benefit from rising demand for minerals amid the green energy transition, which will support ongoing demand, particularly as the company increases its exposure in Western Australia. Improved Revenue Visibility: Emeco’s revenue visibility has benefited from rising service revenue, customer and commodity diversification, and the ability to switch its fleet between commodities. Service-based revenue has increased as a proportion of revenues – these contracts are typically longer-term and more integrated […]
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