Buzzi upgraded to BBB+ by S&P on tightened financial targets

Investing.com -- S&P Global Ratings upgraded Buzzi SpA’s long-term issuer credit rating to ’BBB+’ from ’BBB’ while affirming its short-term ’A-2’ rating, with a stable outlook.

The rating agency cited Buzzi’s commitment to keep reported net debt to EBITDA below 1.5x, reflecting solid cash flow generation even during business downturns.

Buzzi’s S&P Global Ratings-adjusted net debt decreased to approximately €1.06 billion in 2024 from €1.47 billion in 2023, primarily due to the exclusion of a €320 million put option from adjusted debt after Buzzi purchased the remaining 50% of its joint venture in Brazil in October 2024.

The company achieved a net cash position of about €490 million in 2024, improving from an S&P Global Ratings-adjusted debt to EBITDA ratio of 0.2x in 2023. Buzzi has maintained S&P Global Ratings-adjusted debt to EBITDA below 1.0x since 2020.

S&P expects Buzzi to maintain its net cash position at approximately €320 million-€340 million in 2025-2026, with funds from operations (FFO) of about €1.0 billion-€1.2 billion, down from €1.25 billion in 2024.

The rating agency forecasts lower free operating cash flow of about €220 million-€240 million in 2025 and €385 million-€405 million in 2026, compared to €660 million in 2024, due to higher expected capital expenditures for operational efficiency and carbon dioxide emission reductions.

In 2024, Buzzi’s net sales declined by 2.4% to about €5.1 billion from €5.2 billion in 2023, due to subdued demand for cement and ready-mix concrete. Cement deliveries remained stable at 26.3 million tons, while ready-mix sales volumes dropped by 3.7% compared to 2023.

For the first quarter of 2025, Buzzi reported net sales of €1.08 billion, a 3% decline from €1.18 billion in the same period of 2024, attributed to adverse weather conditions and weak demand in the U.S.

S&P projects Buzzi’s revenue to decline by about 4.8%-5.0% to approximately €4.8 billion-€4.9 billion in 2025, followed by growth of about 7.1%-7.3% to €5.1 billion-€5.3 billion in 2026 as construction markets gradually recover.

The rating agency expects Buzzi’s adjusted EBITDA margin to decline to about 27% in 2025 from 29.3% in 2024, before improving slightly to 27.3%-27.4% in 2026.

In May 2025, Buzzi’s Board of Directors approved the issuance of a non-convertible bond loan with a total nominal value of up to €150 million, intended exclusively for qualified investors. S&P expects this will not affect Buzzi’s net cash position.

The stable outlook reflects S&P’s expectation that Buzzi will maintain its net cash position over the next couple of years, providing financial flexibility for moderate acquisitions or investments.

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