S&P changes KUO view to negative

S&P said it changed its outlook for Grupo KUO SAB de CV to negative from stable and affirmed the BB ratings and the mxA national scale rating.

The agency noted that higher corn prices, at $8 per bushel for 2022 compared to $4 per bushel in the last eight years, ate into the EBITDA for the company’s pork segment (Keken). Its 2022 EBITDA fell 65% versus 2021.

“On the other hand, the polystyrene (Resirene) and the automotive segments had solid performances in 2022. Higher prices, more demand for Resirene, and higher sales of transmissions and components, brakes, engine parts, and power train parts supported the results of the chemical and automotive segments,” S&P said in a press release.

The weaker outlook reflects an expectation that high raw material prices for Keken and a challenging global environment will pressure KUO’s credit metrics for the next 12-18 months, the agency said.

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