S&P shifts Zekelman view to positive

S&P said it revised its outlook for Zekelman Industries Inc. to positive from stable and affirmed the BB issuer rating. The BB+ issue and 2 recovery ratings on the company’s $900 million term loan are unchanged.

“Zekelman's earnings have expanded considerably in the past 18-24 months on the back of record steel prices and resilient demand. Hot rolled coil (HRC) prices have soared close to $2,000 per short ton (/st) within the past 12 months but have recently retreated close to $800/st, which is still 33% above the five-year historical average of about $600/st,” S&P said in a press release.

The agency said it estimates Zekelman will produce earnings of $1.2 billion to $1.3 billion in fiscal year 2022.

“The positive outlook reflects the potential for an upgrade within the next 12 months if the company maintains a conservative financial policy as it continues to execute its Z-Modular agenda and other internal growth initiatives,” S&P said.

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