According to Fitch Ratings, Nemak's exposure to potential tariffs that the United States may impose on imports from Mexico would not be immediate but would depend on the duration of such measures. The agency pointed out that the main impact for Nemak would arise from the reduction in volumes, which could be driven by increases in consumer prices or a decrease in demand.
Fitch, in turn, affirmed Nemak's long-term international ratings in both foreign and local currency, as well as the national long-term rating. The ratings reflect Nemak's strong competitive position in its core products and its strategic position in the supply chain, as well as its ability to adapt to the needs of both internal combustion engine vehicles and electric vehicles.
The outlook on Nemak's rating is negative due to the expectation that net leverage will remain above the negative sensitivity of two times in 2025 and the uncertainty surrounding U.S. tariffs. Fitch projects that Nemak's net leverage will be around two times by 2026, having decreased to 2.4 times in 2024 from 2.7 times in 2023.
Regarding Fitch's estimates for Nemak, it is expected that EBITDA will fall below $600 million this year due to lower revenues but will recover starting in 2026. The agency forecasts a reduction in capex to about $300 million in 2025 and 2026, allowing Nemak to generate more than $100 million in free cash flow and contribute to the deleveraging process.
In terms of the assumptions made by Fitch about Nemak, a 2.5% decrease in consolidated equivalent unit volumes in 2025 is projected compared to 2024, followed by 1% growth starting in 2026.
