Fitch Downgrades Lemmi National Cement Investor

Sep 8 , 2024

Fitch Ratings has lowered West China Cement Limited's (WCC) credit rating due to concerns over its financial health and operating environment in Ethiopia. The company's Long-Term Issuer Default Rating has been downgraded to 'B-' from 'B+', and its senior unsecured rating has been reduced to 'CCC+'. WCC's free cash flow is expected to remain negative in 2024, primarily due to high capital expenditures and challenges in generating sufficient revenue. The company faces significant operating risks in Ethiopia, including economic instability, currency depreciation, and difficulties in repatriating funds. Government policies such as the suspension of coal imports and exchange rate liberalisation have further exacerbated these challenges. WCC has a 600 million dollar bond maturing in July 2026, and its ability to refinance this debt is uncertain given its current financial situation. WCC's African operations, including its investment in the Lemmi National Cement complex, are also impacted by these challenges. The 600 million-dollar project, located in the Amhara Regional State, aims to boost local cement production and create jobs, but its viability is threatened by the broader economic environment.