Moody's rates Elektrizace zeleznic Praha Baa1.cz

Moody's Investors Service said it assigned a long-term national scale rating of Baa1.cz to Elektrizace zeleznic Praha as.

The outlook for the rating is stable.

The agency said Elektrizace zeleznic Praha's rating reflects its leading position in the niche segment of overhead traction system construction in its core Czech market; almost 50 years of history in this specialized market and a profitable business track record; visibility of its order flow, given the financial framework for railroads infrastructure reconstruction set by the Czech Railway Administration, which is the company's largest direct and indirect customer; the quality of Elektrizace zeleznic Praha's production; and a relatively conservative capital structure with a net debt-to-EBITDA ratio of 1.3x for 2005.

The rating also takes account of Elektrizace zeleznic Praha's limited revenue base of €100 million, resulting in pronounced customer and geographical concentration; the strong competitive pressures in its relevant markets and entry barriers in some European markets limiting further geographical expansion of the company; its reliance on price development of raw material inputs, especially copper; its relatively narrow product mix; and a liquidity profile relying on significant on-balance sheet cash, given that liquidity credit lines are short term and marginal in terms of amount, Moody's said.

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