Sasa Polyester Sanayi Rating Cut to 'B-' by Fitch, Outlook Steady

sasa-polyester-sanayi-financial-downgrade / Reuters

Financial Struggles Prompt Downgrade

Fitch Ratings has lowered the Long Term Issuer Default Rating of Sasa Polyester Sanayi Anonim Sirketi, Turkey's leading polyester manufacturer, from 'B' to 'B-', signaling heightened default risk amid financial challenges. This downgrade reflects limited financial flexibility, substantial capital investments during unfavorable market conditions, and a reliance on short term debt. Despite these pressures, the stable outlook suggests a potential recovery, with Fitch anticipating leverage reduction to 5x by 2026, provided the company avoids significant new expenditures and strengthens its financial standing. Sasa, majority owned by Erdemoglu Holding with a 57% direct stake and an additional 20% through a controlled entity, operates independently with its own treasury functions and no guarantees for other group companies, offering some operational resilience. The rating also acknowledges Sasa's dominant position in Turkey's polyester market, contributing 54% of domestic production capacity, and its growing vertical integration, though these strengths are tempered by exposure to a single manufacturing site in Adana and heavy reliance on the Turkish economy, which accounted for 77% of its 2024 sales.

Financial metrics paint a challenging picture for Sasa Polyester Sanayi. The company's EBITDA net leverage surged to 12.5x in 2024, up from 8.5x in 2023, far exceeding Fitch's negative sensitivity threshold of 5x. This spike stemmed from cost overruns on its purified terephthalic acid facility, operational since March 2025 with a 1.75 million tonne capacity, alongside weakened liquidity due to a shift toward short term funding. By the end of 2024, short term debt comprised 43% of total debt, up from 35% the previous year, straining EBITDA interest cover ratios to an average of 1.5x over the forecast period. However, Fitch projects improvement, with leverage expected to drop to 6.9x in 2025 and 5.1x in 2026, potentially reaching 4x by 2028 as benefits from completed projects, including new fibre and melt to resin plants with a combined 700,000 tonne capacity set for mid 2025 completion, begin to materialize. Investors searching for "Sasa Polyester Sanayi credit rating analysis" will note the stock's sharp 8.06% decline to $3.31 on the downgrade day, reflecting market unease despite the stable outlook.

Market Position and Future Prospects

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Sasa Polyester Sanayi maintains a robust foothold in Turkey's polyester industry, with capacity expanding from 1.2 million tonnes in 2024 to 1.9 million tonnes in 2025, a growth Fitch believes the domestic market can absorb, enhancing Sasa's competitive edge over smaller local producers. This expansion aligns with the company's strategic investments, such as the $0.4 billion capital expenditure planned through 2028, aimed at boosting efficiency and output. Yet, the polyester market faces headwinds, with weak macroeconomic growth and fierce competition from Chinese and Southeast Asian producers threatening profitability. Turkey's tight monetary policy, expected to moderate GDP growth in 2025, further complicates the outlook for Sasa, given its 77% domestic revenue reliance. For those researching "Sasa Polyester Sanayi market share trends," the company's ability to navigate these conditions while leveraging its integrated operations will be critical.

Operationally, Sasa's single site concentration in Adana poses risks of disruption, though mitigated by 24 segregated production lines. Foreign exchange exposure remains manageable, with 99% of sales tied to the euro and US dollar and 75% of operating costs in hard currency, while only 5% of debt is in Turkish lira as of December 2024. Fitch's key assumptions include sales volumes reaching 1.3 million tonnes in 2025 and averaging 1.6 million tonnes annually from 2026 to 2028, with EBITDA margins holding at 20.5% in 2025 and rising to 22% thereafter. The stock market reaction, with trading volume spiking to 606,573,190 shares against an average of 506,654,227, underscores investor sensitivity to the downgrade, yet the stable outlook offers a glimmer of hope. For stakeholders exploring "Sasa Polyester Sanayi investment risks," the interplay of high leverage, market pressures, and operational strengths will shape the company's trajectory, with careful financial management pivotal to achieving Fitch's forecasted improvements.

Key Takeaways for Investors and Stakeholders

The downgrade to 'B-' highlights immediate risks for Sasa Polyester Sanayi, particularly its high debt load and competitive pressures, but the stable outlook and ongoing projects suggest a path to recovery. Investors may find opportunities if leverage trends improve as projected, though borrowing costs could rise, impacting future plans. The company's dominant domestic position and manageable currency risks provide a foundation for resilience, making it a focal point for those tracking "Sasa Polyester Sanayi financial performance 2025" and beyond.