Standard & Poor's (S&P) upgraded the stand-alone credit profile for Hrvatska elektroprivreda d.d. to bb+.
The long-term credit rating for Hrvatska elektroprivreda d.d. was also affirmed (BB+) along with the stable rating outlook formed in line with the methodologies used by S&P for state-owned companies on the basis of the stand-alone credit profile and the sovereign rating of the Republic of Croatia as HEP's owner.
In its report published on 26 November, S&P stated that Hrvatska Elektroprivreda d.d. (HEP) has improved its ability to manage exposure to historically very volatile hydrological conditions and commodity price fluctuations. HEP's gradual but clear transformation to reduce earnings volatility has protected its credit metrics over the last seven-year cycle during which hydrology conditions in Croatia were both poor and favorable.
S&P analysts expect less volatility in HEP's earnings from hydrological conditions or commodity prices. They believe that HEP will continue being subject to some volatility, which is characteristic of hydropower generation; however, they expect such volatility to be more contained than in the past. HEP has restructured its operations to ensure a long-term efficient and flexible cost structure on a consolidated group level. The rating captures the Agency's expectation that HEP will continue posting sound financial performance.
We are extremely pleased with the stand-alone credit profile upgrade by Standard & Poor's. This assessment is, among others, the confirmation of our active and quality governance of HEP Group. This assessment is a great recognition to Hrvatska elektroprivreda for its continuous and efficient management of internal and external operating factors. The retention of a strong market position in a perennial period, financial liquidity and stability is what makes HEP a strong company prepared for successful business operations and resilient to any potential unfavourable changes in a business environment. Already launched accelerated construction of the new as well as the reconstruction and the modernization of the existing energy capacities in line with the RES scenario of HEP's development, Croatia's strategic documents, and global energy and climate goals and trends will additionally improve future operational efficiency of HEP Group,“ said Frane Barbarić, the President of the Management Board of HEP d.d.