Turkish company Vestel has been downgraded by Fitch from a B+ to B- with a negative outlook, following a not-so-great 2024 for the company but the reasoning for this is interesting and, for us in the UK where Vestel make tons of stuff, surprising.
Fitch states that “expectation of a weaker financial structure and liquidity position for Vestel, due to softer demand and lower-than-expected sales volumes, including for export. Consequently, Vestel’s revenue and margins are under pressure, with an increasing reliance on expensive short-term debt, placing pressure on cash flows and interest coverage.”
Ouch!
With them going on to say that they don’t expect any good news soon, but in fairness to Vestel, some of it is way outside of their control. Such as the local Turkish currency having a huge effect and hyperinflation, there’s not a thing Vestel can do about that.
It gets more interesting, though, with Fitch reporting that Vestel intends to expand into America. Good luck with that under the current administration and the tariffs that they’ve slapped on everyone!
Vestel is also reported to be looking at other non-EU markets as well, and all this is in response to increased competition from Chinese players entering the market and, from our perspective, aggressively taking market share. A thing we’ve been on about for a while.
There is more but those were the highlights for us, the full report you can read here
