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      Scope affirms Abroncs Kereskedőház Kft.’s BB- rating and revises the Outlook to Stable from Negative
      WEDNESDAY, 15/10/2025 - Scope Ratings GmbH
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      Scope affirms Abroncs Kereskedőház Kft.’s BB- rating and revises the Outlook to Stable from Negative

      The Outlook change reflects improving credit metrics in 2024 and Scope’s expectation that the continued stable performance will support credit metrics remaining within the rating case.

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

      Rating action

      Scope Ratings GmbH (Scope) has today affirmed the BB- issuer rating on Hungarian tyre distributor Abroncs Kereskedőház Kft. (AKH) and revised the Outlook to Stable from Negative. Further, Scope has affirmed the BB- rating of the senior unsecured bond (ISIN: HU0000360177) issued by AKH and guaranteed by its sister companies.

      The change in Outlook is driven by better-than-anticipated EBITDA* that led to leverage returning to around 2x in 2024, which Scope projects to remain between 2x and 3x going forward.

      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). AKH’s business risk profile continues to be supported by the issuer’s leading position in the Hungarian tyre market across both wholesale and retail segments. Over the years, the issuer has established strong brand recognition and benefits from a mix of exclusive and semi-exclusive partnerships as well as its role as a distributor of international brands such as Continental and Bridgestone. Despite weak consumer sentiment in 2024, AKH increased its revenue by 4.6% (compared to -7.7% in 2023), mainly driven by an improved pricing mix and growth in service-related revenues, while maintaining a relatively stable market share of around 21% (H1 2025).

      However, the company's size remains a limiting factor in the assessment of its business risk profile. This is reflected in the revenues of EUR 0.1bn and the EBITDA of EUR 3.8m in 2024.

      While geographical diversification has improved since 2022 with the acquisition of ARS in Slovakia, which accounted for 19% of sales in 2024, the issuer’s focus remains on Hungary, limiting its ability to offset macroeconomic headwinds.

      The type of product AKH sells is also cyclical, further limiting the diversification assessment. However, Scope views the issuer’s presence in both customer segments (retail and wholesale) and service integration positively. Moreover, in addition to typical tyre maintenance services (such as changing between summer and winter tyres and wheels, tyre balancing and tyre hotels) AKH provides the servicing and maintenance of brakes, wheel alignments, shock absorbers and small repairs, which are less cyclical. The company’s presence in the lubricants sector further reduces the exposure to the high seasonality of tyre demand.

      Profitability, measured by the EBITDA margin, improved in 2024 to 5.3%, from 3.8% in 2023. Growing consumer preference for lower-priced Asian tyre brands forced the issuer to keep prices low in 2023 to maintain market share. However, in 2024, the company benefited from a more favourable pricing mix and increased revenue from services, which typically provide higher margins. Scope expects the EBITDA margin to remain above 5%, based on: i) easing inflation; ii) the issuer’s strict cost control policy; and iii) the continued focus on services.

      Financial risk profile: BB (unchanged). The financial risk profile benefits from solid interest cover and significant cash reserves but is constrained by the business seasonality which causes cash flow swings over the year.

      Debt/EBITDA declined in 2024 to 2.3x, from 4.0x in 2023, supported by the EBITDA rebound, and is forecasted to temporarily increase to 3x in 2025 owing to the HUF 2,500m in debt entered into to finance exit shareholder CGRAD’s dividend payment. However, Scope projects leverage to gradually return below 3x, supported by amortising debt and moderate EBITDA growth.

      Interest coverage improved to 6.6x in 2024, recovering from a drop to 4.9x in 2023 caused by a weaker EBITDA. According to Scope’s forecasts, interest coverage is expected to remain between 7x and 8x going forward. Although the company is taking on new debt in 2025, the impact will be offset by EBITDA growth and a stable cost of debt.

      Free operating cash flow is expected to remain positive over the next three years, supported by a moderate capex plan and reduced volatility in net working capital. However, Scope notes that free operating cash flow tends to be negative at certain points during the year due to the seasonality of the business, which requires significant inventory build-up in specific months.

      Liquidity: adequate (unchanged). Liquidity is considered adequate. Available cash at year-end 2024 of HUF 3,833m, combined with HUF 397m of projected free operating cash flow, fully covers short-term debt obligations of HUF 504m in 2025. Debt repayments are also expected to be fully covered in 2026 and 2027. Scope notes, however, that the cash balance is subject to high seasonality and tends to reduce as inventory is built up at the end of the first and third quarters. Nonetheless, liquidity remains adequate as the issuer keeps a buffer for seasonality, consisting of credit facilities of around HUF 3,600m maturing at least in 2027.

      Scope highlights the fact that AHK’s senior unsecured bond, issued under the Hungarian National Bank’s Bond Funding for Growth Scheme, has a covenant requiring the accelerated repayment of the outstanding nominal debt amount (HUF 2.6bn at year end 2024) if the debt rating of the bonds stays below B+ for more than two years (grace period) or drops below B- (repayment in 90 days). Such a development could adversely affect the company’s liquidity profile. The rating headroom to entering the grace period is two notches. Scope therefore sees no immediate risk of the rating-related covenant being triggered.

      Supplementary rating drivers: credit-neutral (unchanged). Overall, supplementary rating drivers have no impact on this credit rating action.

      Outlook and rating sensitivities

      The Stable Outlook reflects the improved credit metrics and Scope’s expectation that, despite persistent weak market, EBITDA will continue to grow at a moderate rate, supporting leverage remaining between 2x and 3x.

      The upside scenario for the ratings and Outlook is:

      1. Improved business risk profile through, for example, a significant increase in size, while keeping credit metrics withing Scope rating case

      The downside scenario for the ratings and Outlook is:

      1. Debt/EBITDA of above 4x

      Debt rating

      Scope has affirmed the BB- rating of the senior unsecured guaranteed bond. Scope’s assessment considered the liquidation value based on a hypothetical default scenario in 2026, resulting in an above-average recovery. Scope, however, has refrained from up-notching the rating due to the risk and possibility that senior secured debt could increase on the path to default (volatility of the capital structure and the proportion of senior unsecured debt).

      AKH issued a HUF 3.5bn senior unsecured bond (ISIN: HU0000360177) in December 2020 through the Hungarian central bank’s Bond Funding for Growth Scheme. The bond proceeds were used for refinancing purposes. The bond has a tenor of seven years and a fixed coupon of 2.8%. Bond repayment is in four tranches starting from 2021, with 5.7% of the face value payable yearly in 2021, 2022 and 2023, 10% of the face value payable in 2024, 10.7% of the face value payable in 2025, 12% of the face value payable in 2026, and a 50% balloon payment at maturity. The bond is guaranteed by the following related entities: AKH Vagyonkezelő és Ingatlanhasznosító Korlátolt Felelősségű Társaság; Abroncs Hungária Kereskedőház Korlátolt Felelősségű Társaság; AKH Pneu CZ s.r.o.; A.R.S. spol s.r.o. and SC Anvelonet s.r.l.

      Environmental, social and governance (ESG) factors

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

      All rating actions and rated entities

      Abroncs Kereskedőház Kft.

      Issuer rating: BB-/Stable, Outlook change

      Senior unsecured (guaranteed) debt instrument rating (ISIN: HU0000360177): 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 Outlook, (General Corporate Rating Methodology, 14 February 2025; Retail and Wholesale Rating Methodology, 25 June 2025), are available on https://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 Credit Ratings were not requested by the Rated Entity or its Related Third Parties. The Credit Rating process was conducted:
      With the Rated Entity or Related Third Party participation   YES
      With access to internal documents                                       YES
      With access to management                                                 YES
      The following substantially material sources of information were used to prepare the Credit Ratings: public domain, the Rated Entity 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 these 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 Outlook and the principal grounds on which the Credit Ratings and Outlook are based. Following that review, the Credit Ratings and Outlook were not amended before being issued.

      Regulatory disclosures
      These Credit Ratings and Outlook are issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0. The Credit Ratings and Outlook are UK-endorsed.
      Lead analyst: Claudia Aquino, Associate Director
      Person responsible for approval of the Credit Ratings: Karl Pettersen, Managing Director
      The Credit Ratings/Outlook were first released by Scope Ratings on 20 November 2020. The Credit Ratings/Outlook were last updated on 16 October 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.

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