The latest information on the rating, including rating reports and related methodologies, is available on this LINK.

Rating action

Scope Ratings GmbH (Scope) has affirmed the BB-/Stable issuer rating of Metál Hungária Holding Zrt. (MHH). Concurrently, Scope has affirmed the senior unsecured debt rating of BB-.

The rating affirmation incorporates the correction of errors made in the calculation of Scope-adjusted interest*, EBITDA, debt, funds from operations and free operating cash flow. Scope reviewed the ratings and concluded that the corrections of those calculation errors had no impact on the ratings.

The full list of rating actions and rated entities is at the end of this rating action release.

Key rating drivers

Business risk profile: B (unchanged). MHH’s business risk profile remains anchored in its leading position within Hungary’s niche roofing and façade cladding segment. Despite a 25% YoY decline in revenue to HUF 63bn (EUR 154m) in 2024, the company maintained its involvement in all major industrial development initiatives nationwide. EBITDA stood at HUF 9.5bn (EUR 23m), maintaining previous year’s 15% EBITDA margin due to supported by favourable cost dynamics. Scope projects revenue to stabilise around HUF 50-60bn over the next two to three years.

The decline in foreign direct investment (FDI), down 30% YoY, slowed the pace of industrial and logistics developments, directly impacting MHH’s top-line performance. However, the company remains well-positioned to benefit from future growth, supported by entrenched relationships with multinational clients and a strong reputation for delivering high-quality, light-structure construction solutions. MHH’s niche focus, combined with its access to capital and lack of meaningful competition, continues to serve as a barrier to entry, safeguarding its market share. The company is actively expanding its international footprint, with tenders underway in Austria, Slovenia, Slovakia, Romania, and Croatia, representing a pipeline of around EUR 50m in potential contracts.

Customer concentration increased in 2025, with the top three clients expected to contribute 51% of revenue (HUF 23.2bn), compared to 36% in 2024. Top-1 alone is forecasted to account for 29% of revenue. While this concentration heightens exposure to individual clients, the risks are considered manageable. Larger customers typically exhibit good credit quality and recurring demand, and the short duration of projects (typically 3-6 months) limits the impact of potential delays.

Profitability remained solid in 2024, with EBITDA of HUF 9.5bn and a margin of 15%, supported by favourable cost dynamics and stable project pricing. The company’s dominant market position and advantageous procurement terms were key drivers of this performance. While profitability is expected to moderate due to increased competition and subcontractor oversupply, margins are projected to remain within a sustainable range of 11-13% over the medium term. The order backlog of fully contracted projects has reduced slightly, dropping to HUF 32.0bn as of H1 2025. Contracts exceeding HUF 1bn accounted for 65% of total revenue, up from 50% in prior years, underscoring MHH’s continued relevance in large-scale projects.

Financial risk profile: BBB+ (unchanged). The financial risk profile continues to benefit from strong debt protection, good leverage and good cash flow cover.

Debt protection remains strong, with EBITDA interest cover consistently exceeding 10x in recent years (2024: 12.5x). Interest-bearing debt declined to HUF 14.3bn at YE 2024 (YE 2023: HUF 18.5bn), following partial repayment of a previously introduced short-term working capital line. Operating leases of HUF 4.8bn make up the remainder of debt. The issuer continues to benefit from low-cost financing from bonds issued in 2020 and 2021, which began amortising in 2023 (HUF 906m annually), with an average cost of 3.3%, well below short-term bank rates. Financial income declined to HUF 99m in 2024 (2023: HUF 135m), as deposit rates normalised and money market positions were reduced to HUF 2.9bn. With no material increase in debt expected and continued support from interest-free advance payments by multinational clients, Scope forecasts interest cover to remain comfortable around 9-10x. However, limited backlog visibility beyond 2026 poses some risk.

Leverage, as measured by debt/EBITDA, increased to 2.0x at YE 2024 (YE 2023: 1.7x), driven by lower EBITDA. The bonds issuance enabled MHH to build inventory and strengthen its competitive position during a period of supply chain disruption, contributing to a threefold increase in the balance sheet to HUF 48bn in 2024 (2019: HUF 17.7bn). Scope projects EBITDA to decline to around HUF 7.0bn in 2025, which could lead to a further increase in leverage. While visibility on the order backlog beyond 12 months remains limited, longstanding relationships with multinational clients and a strong reputation mitigate the risk of a sharp revenue drop. Scope expects leverage to remain below 3x in 2025 and 2026, even if additional bank facilities are drawn to support new large-scale projects. Scope forecasts a decline in the FFO/debt ratio to around 30% in 2025 (2024: 40%), driven by lower operating profitability.

Free operating cash flow (FOCF) remained positive in 2024 and increased significantly (up 441%), driven by improved payment terms, which reduced pre-financing needs and enhanced cash flow. However, FOCF volatility remains high, primarily due to working capital fluctuations, as construction work is largely prefinanced by the contractor. Volatility stems from larger-scale projects, which require a greater concentration of cash flow sources and higher pre-financing (working capital). However, this is somewhat offset by the decision on the part of several large multinational developers to provide interest-free advances to sub-contractors to avoid project delays. Risks associated with pre-financing are mitigated by legal protections for projects above HUF 1.5bn (68% of MHH’s backlog). The agency projects cash flow cover, as measured by FOCF/debt, to remain positive over the next 18 to 24 months, although subject to fluctuations. While accounts receivable continues to represent nearly one-third of revenue, longstanding relationships with multinational clients and improved collection periods (40–45 days) support reliable cash conversion. MHH’s cost structure remains efficient, with stable overhead staffing and no major changes planned. Additionally, the company benefits from a natural hedge, with around 70% of contracts and supplier payments denominated in euros, reducing FX risk and supporting stable financial performance.

Liquidity: adequate. MHH’s liquidity is adequate, with cash sources (unrestricted cash of HUF 9bn as of end-2024) and forecasted FOCF of HUF 7.4bn in 2025 fully covering short-term financial obligations, including HUF 3bn in debt maturing by end-December 2025. Liquidity remains sufficient in 2026 as well, supported by a higher end-2025 cash balance (HUF 12.3bn) and forecasted FOCF of HUF 4bn, comfortably covering HUF 3bn in short-term debt maturing by end-December 2026. The company has consistently sustained operations, including interest payments, bond amortisation, and dividend distributions, from internally generated cash flows. Liquidity is supported by a strong net working capital position and investments in marketable securities, which contribute to financial income and FX gains. As of 30 June 2025, MHH had committed credit facilities totalling EUR 19.4m (HUF 7.7bn), all of which remained undrawn. While the current cash position is strong, management notes that sustaining this level may become more challenging if international growth does materialise.

The senior unsecured bond (ISIN: HU0000360920) issued in November 2021 under the Hungarian Central Bank’s bond scheme has an accelerated repayment clause. The clause requires MHH to repay the nominal amount of the bond (HUF 5.7bn outstanding as H1 2025) in case of rating deterioration (two-year cure period for a B/B- rating, repayment within 30 days after the bond rating falls below B-, which could have default implications). Considering the current debt rating, there is good headroom on the covenant, supported by the issuer's stable credit profile.

Additionally, MHH has a financial covenant that would trigger immediate bond repayment. During the entire term of the bonds, MHH needs to uphold the following: i) net debt/EBITDA must not exceed 4.0x for any financial year prior to the 2026 financial year; and ii) net debt/EBITDA must not exceed 3.0x for fiscal year 2026 and any fiscal year thereafter. While Scope’s forecasted leverage peaks at 2.4x in 2026, indicating compliance, the headroom is relatively tight which leaves limited buffer for underperformance. A breach of the covenant could lead to accelerated repayment of the bonds, which would significantly pressure liquidity. If such a scenario were to materialise in 2027, MHH’s ability to cover the repayment would depend heavily on available cash (HUF 11.9bn as at end-2026), committed credit lines (HUF 4bn, credit line expiry Sep-2029) and potential refinancing options. This could introduce credit risk, particularly in a downside scenario where operating performance deteriorates or cash flow weakens. However, from current perspective, Scope expects MHH to remain in compliance with its financial covenants throughout the forecast period.

Supplementary rating drivers: credit-neutral. Supplementary rating drivers have no impact on the issuer rating.

Outlook and rating sensitivities

The Stable Outlook reflects Scope’s view that credit metrics will remain solid, with debt/EBITDA expected to develop within a range of 2.0-3.0x over the next 18 to 24 months. This is underpinned by the company’s ability to execute its order backlog, ensuring revenue visibility for 2025-2026. Despite challenges from the local construction downturn and an uncertain macroeconomic environment, Scope expects the company to maintain controlled leverage.

The upside scenario for the ratings and Outlook is:

• Improving business risk profile, e.g. driven by improved diversification by segment and/or geography to reduce the reliance of its top line on FDI (deemed remote).

The downside scenario for the ratings and Outlooks is:

• Debt/EBITDA increasing above 3x on a sustained basis. This could be triggered by: i) an adverse operational development leading to reduced profitability and operating cash flows; or ii) higher dividend and dividend-like pay-outs in excess of FOCF.

Debt ratings

Scope has affirmed the BB- rating on senior unsecured debt issued by Metál Hungária Holding Zrt. Scope expects an ‘above average’ recovery for outstanding senior unsecured debt in a hypothetical default scenario in 2026 based on MHH's going concern status. As the company is a specialist contractor (façade cladding and roof covering), its enterprise value is linked to ‘soft’ assets (access to long-term customers and technical knowledge in engineering and manual labour) rather than ‘hard’ assets.

The estimated EBITDA at default is HUF 4.5bn, implying an enterprise value at default of HUF 13.5bn. Scope expects an 'above average’ recovery for the company's senior unsecured debt (HUF 10.4bn in bonds at default, HUF 1.7bn in committed credit facilities, and HUF 0.3bn in guarantees), which allows for a one-notch uplift of the debt category rating above that of the issuer. However, due to the potential for a more volatile capital structure on the path to default, which could entail the introduction of secured debt with a higher ranking, the rating remains at the same level as that of the issuer resulting in the affirmation of the debt class rating at BB-.

Environmental, social and governance (ESG) factors

Overall, ESG factors have no impact on this credit rating action.

All rating actions and rated entities

Metál Hungária Holding Zrt.

Issuer rating: BB-/Stable, affirmation

Senior unsecured debt rating: BB-, affirmation

*All credit metrics refer to Scope-adjusted figures.

Stress testing & cash flow analysis
No stress testing was performed. Scope Ratings performed its standard cash flow forecasting for the company.

Methodology
The methodologies used for these Credit Ratings and/or Outlook, (General Corporate Rating Methodology, 14 February 2025; Construction and Construction Materials Rating Methodology, 24 January 2025), are available on scoperatings.com/governance-and-policies/rating-governance/methodologies.
Information on the meaning of each Credit Rating category, including definitions of default, recoveries, Outlooks and Under Review, can be viewed in ‘Rating Definitions – Credit Ratings, Ancillary and Other Services’, published on scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Historical default rates of the entities rated by Scope Ratings can be viewed in the Credit Rating performance report at scoperatings.com/governance-and-policies/regulatory/eu-regulation. Also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): registers.esma.europa.eu/cerep-publication/. A comprehensive clarification of Scope Ratings’ definitions of default and Credit Rating notations can be found at scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Guidance and information on how environmental, social or governance factors (ESG factors) are incorporated into the Credit Rating can be found in the respective sections of the methodologies or guidance documents provided on scoperatings.com/governance-and-policies/rating-governance/methodologies.
The Outlook indicates the most likely direction of the Credit Ratings if the Credit Ratings were to change within the next 12 to 18 months.

Solicitation, key sources and quality of information
The Rated Entity and/or its Related Third Parties participated in the Credit Rating process.
The following substantially material sources of information were used to prepare the Credit Ratings: public domain, the Rated Entity, the Rated Entities' Related Third Parties and Scope Ratings' internal sources.
Scope Ratings considers the quality of information available to Scope Ratings on the Rated Entity or instrument to be satisfactory. The information and data supporting the Credit Ratings originate from sources Scope Ratings considers to be reliable and accurate. Scope Ratings does not, however, independently verify the reliability and accuracy of the information and data.
Prior to the issuance of the Credit Rating action, the Rated Entity was given the opportunity to review the Credit Ratings and/or Outlook and the principal grounds on which the Credit Ratings and/or Outlook are based. Following that review, the Credit Ratings and/or Outlook were not amended before being issued.

Regulatory disclosures
These Credit Ratings and/or Outlook are issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0. The Credit Ratings and/or Outlook are UK-endorsed.
Lead analyst: Vishal Joshi, Analyst
Person responsible for approval of the Credit Ratings: Sebastian Zank, Managing Director
The Credit Ratings/Outlook were first released by Scope Ratings on 30 March 2020. The Credit Ratings/Outlooks were last updated on 11 September 2024.

Potential conflicts
See scoperatings.com under Governance & Policies/Regulatory for a list of potential conflicts of interest disclosures related to the issuance of Credit Ratings, as well as a list of Ancillary Services and certain non-Credit Rating Agency services provided to Rated Entities and/or Related Third Parties.

Conditions of use/exclusion of liability
© 2025 Scope SE & Co. KGaA and all its subsidiaries including Scope Ratings GmbH, Scope Ratings UK Limited, Scope Fund Analysis GmbH, Scope Innovation Lab GmbH and Scope ESG Analysis GmbH (collectively, Scope). All rights reserved. The information and data supporting Scope’s ratings, rating reports, rating opinions and related research and credit opinions originate from sources Scope considers to be reliable and accurate. Scope does not, however, independently verify the reliability and accuracy of the information and data. Scope’s ratings, rating reports, rating opinions, or related research and credit opinions are provided ‘as is’ without any representation or warranty of any kind. In no circumstance shall Scope or its directors, officers, employees and other representatives be liable to any party for any direct, indirect, incidental or other damages, expenses of any kind, or losses arising from any use of Scope’s ratings, rating reports, rating opinions, related research or credit opinions. Ratings and other related credit opinions issued by Scope are, and have to be viewed by any party as, opinions on relative credit risk and not a statement of fact or recommendation to purchase, hold or sell securities. Past performance does not necessarily predict future results. Any report issued by Scope is not a prospectus or similar document related to a debt security or issuing entity. Scope issues credit ratings and related research and opinions with the understanding and expectation that parties using them will assess independently the suitability of each security for investment or transaction purposes. Scope’s credit ratings address relative credit risk, they do not address other risks such as market, liquidity, legal, or volatility. The information and data included herein is protected by copyright and other laws. To reproduce, transmit, transfer, disseminate, translate, resell, or store for subsequent use for any such purpose the information and data contained herein, contact Scope Ratings GmbH at Lennéstraße 5, D-10785 Berlin. Public Ratings are generally accessible to the public. Subscription Ratings and Private Ratings are confidential and may not be shared with any unauthorised third party.