The 'A++' rating indicates that OJSC KuibyshevAzot qualifies as a highly reliable borrower, with the lowest risk of a delay in meeting obligations imaginable.
We regard the continuing growth of the Company's assets, the high, well-structured and constantly growing equity capital, the good profitability and return rates, the reasonable and well-balanced borrowing policy as the key positive rating drivers for OJSC KuibyshevAzot.

Over the period under review, the Company's assets kept growing steadily. For the last eight years, they increased more than twice to almost RUB 30.7 billion at the start of 2014.

For the eight-year period, OJSC KuibyshevAzot's equity capital increased more than three times. At the start of 2014, the Company's equity capital exceeded RUB 18.7 billion, being more than 50% above the total amount of obligations, which we regard as a strong positive argument. OJSC KuibyshevAzot's retained earnings reached almost RUB 17.4 billion, i.e. almost 93% of its equity capital.

OJSC KuibyshevAzot has been successful in keeping its operation profitable. In 2013, it earned more than RUB 28 billion in revenues, net profit exceeded RUB 2.5 billion. KuibyshevAzot's net profit margin was 9.2%, return on sales was 13.1%, return on equity (ROE) was 14.3%, return on invested capital (ROIC) being 10.3%. The profitable operation enabled the Company to maintain the ratio of total loan debt to annual EBITDA (earnings before interest, taxes, depreciation, and amortization) at 1.55.

Our review shows that the management team of OJSC KuibyshevAzot pursues a reasonable and well-balanced borrowing policy. As a whole, the Company has a perfect credit history, without a single default on financial obligations or late payments. There are no overdue liabilities in the Company's debt profile either.

Today, long-term liabilities account for more than 97% of the Company's loan debt, with almost 55% of the debt instruments denominated in Russian rubles. The interest coverage ratio of OJSC KuibyshevAzot is 9.2, while its net accumulated earnings (as of January 1, 2014) are almost 5 times the total amount payable across the next 18 months under the loan debt servicing schedule (until July 1, 2015).

At the same time, the Company's dependence on gas prices, electricity and rail freight rates as well as the influence of the global market environment are putting pressure on the Company's rating.

The share of gas prices, electricity and rail freight rates in the Company's product cost being fairly high, their possible growth could undermine KuibyshevAzot's competitive edge

The company exports a large part of its goods, and its financial soundness in many respects depends on the general economic trends influencing the demand and pricing in the markets of nitrogen fertilizers and caprolactam">caprolactam.

OJSC KuibyshevAzot is the largest Russian chemical enterprise specializing in the production of ammonia, nitrogen fertilizers, caprolactam">caprolactam and caprolactam">caprolactam-based deeper conversion products. OJSC KuibyshevAzot is among the top 10 largest producers in the domestic nitrogen and nitrogen compound making industry and is firmly placed as the largest producer of caprolactam">caprolactam in Russia (in particular, it accounts for more than 53.5% of the caprolactam">caprolactam and ca. 5.5% of the nitrogen fertilizers produced in Russia). KuibyshevAzot exports more than half of its goods.

Company name: OJSC KuibyshevAzot

This press release is based on the statement of assigning a credit rating to OJSC KuibyshevAzot.

The credit rating, along with any information and conclusions provided in this press release, only conveys our opinion on the Company's creditworthiness and shall not be construed as advice on the purchase and sale of securities or the provision of loan facilities to the Company.

CJSC AK&M Rating Agency will not incur any responsibility for any interpretations, inferences and consequences related to the application of results of the rating estimation procedure by any third parties.

CJSC AK&M Rating Agency is a leading independent national rating agency engaged in rating activities since 1993.

CJSC AK&M Rating Agency is accredited by the Ministry of Finance of the Russian Federation (order no. 452 as of September 17, 2010).

CJSC AK&M Rating Agency
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Moscow, Russia
www.akmrating.ru
Phone no. (495) 916-70-30, fax no.: (499) 132-69-18