AKÇA KİMYEVİ MADDELER NAKLİYAT TİCARET VE SANAYİ A.Ş.

Earnings Release • Aug 26, 2024

JCR Eurasia Rating JCR-ER, Group of Japan Credit Rating Agency, Ltd." (JCR)

Corporate Credit Rating

□New ⊠Update

Sector: Wholesale Trading Publishing Date: 23/08/2024

Team Leader Yesim Karaoğlu +90 212 352 56 73 yesim.karaoglu@jcrer.com.tr

Senior Analyst Yunus Katrancı

+90 212 352 56 73 yunus.katranci@jcrer.com.tr

National 11 A ICR (tr) (tr) National ICR Stable Stable Outlooks International BB FC ICR ICRs (Issuer International Credit FC ICR Stable Profile) Outlooks International BB ÷ LC ICR International LC ICR Stable Outlooks National ISR ٠ ISRs International (Issue FC ISR Specific Profile) International LC ISR BB Foreian (Stable) Currency Sovereign* Local BB	RATINGS		Long Term	Short Term
(Stable) Currency

Akça Kimyevi Maddeler Nakliyat Ticaret ve Sanayi A.Ş.

JCR Eurasia Rating, has evaluated the consolidated structure of "Akca Kimyevi Maddeler Nakliyat Ticaret ve Sanayi A.Ş." in investment grade category with high credit quality and revised the Long-Term National Issuer Credit Rating to 'A (tr)' from 'A+ (tr)' and the Short-Term National Issuer Credit Rating to 'J1 (tr)' from 'J1+ (tr)' with 'Stable' outlooks. On the other hand, the Long Term International Foreign and Local Currency Issuer Credit Ratings and outlooks were assigned as 'BB/Stable' as parallel to international ratings and outlooks of Republic of Türkiye.

Akça Kimyevi Maddeler Nakliyat Ticaret ve Sanayi A.Ş. (hereinafter referred to as `Akça Kimya' or 'the Company') was established in 2004 in Kocaeli. Akça Kimya distributes various chemicals in the Turkish market and provides services in the fields of textile, wood, agriculture, polyester, paint, detergent and cosmetics, food and feed. The main product groups in the portfolio of the Company, which sells approximately 100 different chemical products, are alkali chemicals, acids, phosphates, solvents, salts and oils. The Company's facility and warehouse are located in the Yarımca region of Izmit on an area of 40.000 m². The Company has a warehouse of 4.000 m² for dry chemicals and operates 21 warehouse tanks with a capacity of $40,000$ m³ for liquid chemicals. In addition, the facility has its own port and can be used for the discharge of liquid cargo ships. Akca Kimya employed a total workforce of 30 as of FYE2023 (FYE2022; 33).

İsfendiyar Zülfikari, the main partner of the Company, has been serving as the Chairman of the Board of Directors of Zülfikarlar Holding A.S. since 2001, as the third-generation representative of the Holding founded in 1942. Zülfikarlar Holding A.S., which started its activities in 1942 with the trade of chemicals, has also invested in different sectors during its journey and today operates in the fuel distribution, energy, chemistry, construction, logistic and finance sectors.

Key rating drivers, as strengths and constraints, are provided below.

· Partially diversified product range and

resilience to sales revenue of the Company

• Long-lasting presence in the industry

customers' industry segment providing

Strengths	Constraints
· Satisfactory financial leverage metrics as of	• Decline in sales revenue in FY2023 due to
FYE2023 following the net cash position as of	decrease in prices of chemical products
FYE2022	despite increase in sales volume
• Maintaining a reasonable level of current ratio	. High financing expenses in FY2023 and
with positive net working capital, despite the	1Q2024 distorting bottom line results
cash outflow from operations in FY2023	coupled with deteriorated coverage metrics
• Funding diversity through utilization of bond	· Increasing operational expenses causing
issuances	deterioration in operating ratio as well as
· Immaterial level of doubtful receivables	core profit margins in FY2023
supporting asset quality and utilization of	• High level of import dependency due to the
insurance reducing the collection risk in a	nature of business
certain extent	• Eluctuations on raw material prices and

· Fluctuations on raw material prices and currency may be the source of risk for profitability margins

· Leading economic indicators signal global economic slowdown whereas quantitative tightening actions aim to restrict consumption growth and achieve a softlanding in the domestic side

Considering the aforementioned points, the Company's Long-Term National Issuer Credit Rating has been revised to 'A (tr)'. The Company's satisfactory leverage metrics, funding diversity, product variety and collection ability along with ongoing uncertainties arisen from geopolitical tensions as well as global tight financial conditions have been evaluated as important indicators for the stability of the ratings and the outlooks for Long and Short-Term National Issuer Credit Ratings are determined as 'Stable'. The Company's investment progress and financing process, the cash flow to be obtained after the investment, growth strategy, profitability indicators, financial leverage and asset quality will be closely monitored by JCR Eurasia Rating in upcoming periods. The macroeconomic indicators at national and international markets, as well as market conditions and legal framework about the sector will be monitored as well.

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