The credit rating of LLC “AUTOMOBILE PLANT “NAZ” (hereinafter, the Company) has been downgraded due to a reduction in leverage and debt service scores as a result of weaker operating metrics than the Agency expected in 2025 and a revision of their forecast for 2026 and 2027.
The credit rating outlook has been changed from Stable to Negative due to the risk that market recovery dynamics in the light commercial and medium-duty truck segments will be weak, which could lead to a deterioration in the Company’s profitability and size assessments.
The credit rating reflects the very strong market position, high level of corporate governance, as well as the medium business profile and geographic diversification. The financial risk profile takes into account the large size of the Company, very high profitability, strong indicators for cash flow and liquidity, as well as medium leverage and low coverage.
LLC “AUTOMOBILE PLANT “NAZ” is a high-tech motor vehicle manufacturer focused on light commercial vehicles, medium trucks, and minibuses. It is one of the largest Russian automotive companies.
KEY ASSESSMENT FACTORS
Very strong assessment of market position. The Company occupies leading positions in the light commercial and medium vehicle segments. Its market share is around 60%. The model range covers several product families with different price niches. In addition, the Company creates multi-purpose solutions (including jointly with end consumers) for public utilities and municipal services, social vehicles, and vehicles for small and medium-sized businesses.
The medium business profile assessment stems from the high cyclicality of the sales market, and a high assessment of the sub-factor Dependence on Subcontracting and Components. The Company’s Nizhny Novgorod manufacturing facility includes the main assembly lines, foundry, forging and stamping plants, robotic welding shops and painting complexes. The share of Russian-made components, including those made by the Company, varies depending on model. In terms of imported components, the Company has carried out work to select and develop alternative components.
High assessment of the level of corporate governance. The Agency assesses the Company’s strategy as successful and consistent. In accordance with it, an efficient production system of continuous improvements and inventory optimization has been introduced, production assets have been upgraded, and the model range is being expanded as per consumer needs. Work is currently being performed to increase the level of localization and enter new market segments. The Company has a full-fledged system for risk management, strategic planning, a single treasury, and centralized procurements. The structure of the group mainly consists of production companies, while operations with related parties are economically justified. The Company publishes annual and semi-annual IFRS reporting.
Very high profitability and large size of the Company. In 2024, the Company’s revenues grew by 22.6% and FFO before net interest payments and taxes increased by 28.5%. The FFO margin before interest and taxes increased to 17.1% (vs. 16.3% a year earlier). In 2025, the light commercial and medium-duty truck market is contracting, which has led to a decline in the Company’s sales since the start of the year and negative dynamics for the abovementioned indicators. Furthermore, a slow recovery in operating indicators in 2026 could lead to deterioration of the Company’s profitability and size scores.
Medium assessment of leverage and low assessment of coverage. In 2024, the ratio of total debt to FFO before net interest payments was 2.9x (vs. 2.7x a year earlier). In 2025, the Agency expects further growth of the Company’s total debt, which, taking into account lower FFO before net interest payments, led to a deterioration of the leverage assessment. The loan portfolio is made up of ruble-denominated loans and other borrowings. The repayment schedule is rather comfortable and balanced, with no peaks, while the portfolio is primarily long-term. The ratio of FFO before net interest payments to interest payments was 2.4x in 2024 (vs. 2.8x in 2023). In 2025, taking into account the influence of these factors, the aforementioned ratio is expected to decline to 1.3x, while the weighted average indicator for 2023–2028 will be 2.0x.
The strong liquidity is related to the stably positive operating cash flow, comfortable debt repayment schedule, and wide access to external liquidity sources (large volume of unused open credit lines). The weighted average free cash flow (FCF) margin from 2023 to 2028 was 2.8% and is assessed by the Agency as medium.
KEY ASSUMPTIONS
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Sales in the domestic light commercial vehicle and medium-duty truck market at no less than 40,000 units in 2025;
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Capital expenditures in 2025–2027 as per the Company’s planned timing and volumes.
POTENTIAL OUTLOOK OR RATING CHANGE FACTORS
The Negative outlook assumes that the rating will most likely be downgraded within the 12 to 18-month horizon.
A positive rating action may be prompted by:
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The weighted average FCF margin exceeding 10%;
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Weighted average ratio of total debt to FFO before net interest payments falling below 2.0x coupled with the weighted average ratio of FFO before net interest payments to interest payments exceeding 2.5x.
A negative rating action may be prompted by:
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Weighted average ratio of FFO before net interest payments to interest payments falling below 1.0x;
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Weighted average FFO margin before interest and taxes falling below 15%;
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Deterioration of the Company’s liquidity;
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Weighted average FCF margin falling below 2%.
RATING COMPONENTS
Standalone creditworthiness assessment (SCA): а.
Support: none.
ISSUE RATINGS
There are no outstanding issues.
REGULATORY DISCLOSURE
The credit rating has been assigned to LLC “AUTOMOBILE PLANT “NAZ” under the national scale for the Russian Federation based on the Methodology for Assigning Credit Ratings to Non-Financial Corporations under the National Scale for the Russian Federation and the Key Concepts Used by the Analytical Credit Rating Agency within the Scope of Its Rating Activities.
The credit rating of LLC “AUTOMOBILE PLANT “NAZ” was published by ACRA for the first time on October 17, 2023. The credit rating and its outlook are expected to be revised within one year following the publication date of this press release.
The credit rating was assigned based on data provided by LLC “AUTOMOBILE PLANT “NAZ”, information from publicly available sources, and ACRA’s own databases. The credit rating is solicited and LLC “AUTOMOBILE PLANT “NAZ” participated in its assignment.
In assigning the credit rating, ACRA used only information, the quality and reliability of which were, in ACRA’s opinion, appropriate and sufficient to apply the methodologies.
ACRA provided no additional services to LLC “AUTOMOBILE PLANT “NAZ”. No conflicts of interest were discovered in the course of credit rating assignment.
