S&P Global Ratings announced today that the lower-than-expected performance of Metlen Energy & Metals' energy business for the full year 2025 will not have an immediate impact on the issuer credit rating 'BB+' issuer credit rating or its stable outlook at this stage.
On February 6, 2026, Metlen revised its EBITDA guidance 25% lower than originally estimated. This revision stems from:
- Delays in completing transactions under the company's asset rotation plan.
- Cost overruns and schedule delays in certain projects (EPC).
We now expect adjusted EBITDA of approximately €750 million, which translates into an expected debt-to-EBITDA ratio of around 4.0x for 2025, significantly higher than the 2.0x we consider compatible with Metlen's current rating, the agency notes.
Previously, we expected the adjusted debt-to-EBITDA ratio to be around 2.0x-2.5x. However, we estimate that the adjusted debt-to-EBITDA ratio will return to around 2.0x as early as 2026 and then comfortably return below 2.0x in 2027-2028.
Execution risk is a key aspect of EPC activity. The company's track record in recent years has been strong. Therefore, we tend to view recent project-related cost overruns, including the Protos waste-to-energy plant in the UK, as one-off events, fully incorporated into our 2025 EBITDA guidance. In our current base case scenario, we do not expect further deviations in the near term because:
- We understand that all projects have been reviewed and placed under strict control and, although cost overruns have been recorded, the number of projects affected is limited, with the rest progressing according to plan.
- In recent years, the company has focused on solar photovoltaic (PV), battery, and grid projects, which we consider to be less complex and carry a lower execution risk compared to technologically advanced projects such as Protos.
- Most conventional power generation projects in the portfolio and Protos are expected to come online in 2026, with some in 2027, bringing them close to completion and reducing the risk of additional cost overruns.
Delays in transactions are credit neutral. Three renewable energy portfolio sales expected to be completed in 2025, two of which were significant, have been postponed.
One of the two large transactions, the sale of a 283 MW solar PV portfolio in the United Kingdom, was already completed earlier this month and, to our understanding, negotiations are continuing for the second, a solar portfolio in Australia. Although the second transaction may be further delayed, we expect it to be completed within the year.
In addition, a large part of the company's current projects under the asset rotation plan has been pre-sold, which is now a prerequisite for new projects, "locking in" prices and buyers and, in our view, mitigating the risk associated with completing transactions.
The acquisition of the Aluminium Dunkerque smelter in France could be a transformative development. According to press reports, the smelter in France could be valued at around €1 billion, with EBITDA of around €300 million-€350 million. However, other interested parties include Glencore, Rio Tinto, Sumitomo, EGA, and Alba, and we have no visibility on either Metelon's ability to acquire this asset or how it would be financed, analysts point out.
Nevertheless, if such a transaction were to materialize, Metel's aluminum portfolio would be significantly strengthened. Combined with organic EBITDA growth towards the company's medium-term target, it could also support EBITDA growth to €1.8 billion-€2.0 billion in the medium term. This could, over time, support a reassessment of our view on Metlen's position in the business environment.
However, the rating headroom is extremely limited. Given the already narrow rating headroom, any significant increase in debt levels, which could result from large debt-financed acquisitions or higher-than-expected investments, would slow down the deleveraging process and could lead to negative rating action.
The company's ability to achieve its medium-term target of sustainable EBITDA growth of €1 billion-€1.5 billion and generate positive free cash flow is also a key factor in supporting the deleveraging process. We are therefore closely monitoring the company's operating performance and the implementation of the "Big Three" plan.