Rating Release
Agusto & Co hereby assigns a “Bbb-” rating to Romco Recycling Company Limited
The rating expires on 30 June 2024.
Agusto & Co hereby assigns a “Bbb-” rating to Romco Recycling Company Limited (“Romco Recycling”, “Romco” or “the Company”). The assigned rating is supported by the Company’s satisfactory profitability upheld by earnings growth, satisfactory cash flow position and adequate working capital. The rating also considers Romco’s minimal exposure to foreign exchange risks given that the bulk of its income is denominated in the United States Dollars, its good position in the Nigerian Aluminium Recycling Industry, its expanded operating scale and its qualified and experienced management team. Notwithstanding, the rating is constrained by concerns over Romco Recycling’s elevated debt profile and interest burden. The rating is also moderated by the adverse impact of the prevailing macroeconomic headwinds on profit margins and an unfriendly regulatory environment evidenced by the export restrictions on recycled metals imposed by the Ministries of Environment and Finance in the first quarter of 2023, which negatively impacted Romco’s financial performance, although the ban has been lifted after it obtained the required export permits.
Romco Recycling commenced operations in 2018. The Company is involved in recycling scrap non-ferrous metals into aluminium and copper ingots for export to original equipment manufacturers (OEMs). The Company is a subsidiary of Romco Group Ltd – an entity headquartered in London with interests in other African countries. Romco currently has a 30,000 metric tonnes (MT) annual aluminium recycling capacity while its copper plant can produce 4,320 MT of copper ingots per annum with plans to further expand into the recycling of lead, zinc, lithium and electronic waste (e-waste) in the medium term.
The opinions expressed in this rating release do not represent any investment or other advice and should therefore not be construed as such. Visit www.agusto.com for further information.