Nordic Credit Rating has assigned a 'BBB+' long-term issuer rating to Norway-based maritime technology company Kongsberg Maritime ASA. The outlook is stable. An 'N2' short-term issuer rating has also been assigned.
Rating rationale
The long-term issuer rating is supported by the company’s leading role in providing integrated technological solutions for increased energy efficiency and decarbonisation in the global maritime industry. The rating also reflects sound cash flows and a strong financial position, characterised by limited debt and a growing net cash position. While we expect the Norwegian government to initially remain a majority owner post the separate listing of Kongsberg Maritime, we are less convinced of the government's long-term commitment given the limited policy role. Accordingly, we view the ownership as neutral to the rating.
The rating is constrained by Kongsberg Maritime's relatively small size compared to global peers and its exposure to the cyclical shipping industry. Elevated geopolitical and economic uncertainty in the near term may negatively affect its maritime customers. However, growing revenues from advanced vessels in the naval, offshore energy and cruise segments support strong demand, while aftermarket services provide diversification and counter-cyclical benefits to new-build shipping activities.
Stable outlook
The Stable outlook reflects our expectation of growing demand for the company's green maritime technology, driven by stricter regulations and energy requirements that support increased newbuilding of ships and aftermarket sales. We also anticipate limited near-term impact on its operations from ongoing Middle East conflicts and sustained EBITDA margins around 13-14%. Additionally, the stable outlook reflects the company's net cash position and our expectation that the company's financial leverage, as measured by net debt/EBITDA, will remain below 1.0x.
We could raise the rating to reflect improved profitability, raising EBITDA margins towards 20%, and improved demand for green maritime products substantially driving scale and earnings. We could also raise the rating if we see evidence of strong commitment from the Norwegian government.
We could lower the rating to reflect worsening economic conditions leading to an EBITDA margin of below 12% on a sustained basis or increased financial leverage leading to net debt/EBITDA sustainably above 1.0x.
| Rating list | Rating |
|---|---|
| Long-term issuer credit rating: | BBB+ |
| Outlook: | Stable |
| Short-term issuer credit rating: | N2 |
| Senior unsecured issue rating: | BBB+ |
Contacts:
Elisabeth Adebäck, analyst, +46700442775, elisabeth.adeback@nordiccreditrating.com
Christian Yssen, analyst, +4740019900, christian.yssen@nordiccreditrating.com
Sean Cotten, chief rating officer, +46735600337, sean.cotten@nordiccreditrating.com
The methodology documents used for this rating are NCR's Corporate Rating Methodology published on 8 May 2023, NCR's Rating Principles published on 14 Feb. 2024 and NCR's Group and Government Support Rating Methodology published on 14 Feb. 2024. For the full regulatory disclaimer please see the rating report.