Fitch affirms Localiza ratings at BB+ and AAA(bra)

On Monday, September 21, Fitch Ratings affirmed Localiza's long-term foreign and local currency credit ratings at "BB+", as well as its national long-term rating at "AAA(bra)". The rating outlook remains stable.

The rating agency stated that the scores reflect the group's leadership in the Brazilian car rental and fleet management sector, its large scale, and its resilient operational performance across economic cycles. Fitch noted that the company benefits from a diversified customer base and long-term contracts for a significant portion of its revenue.

Fitch expects Localiza to gradually expand its EBITDA by growing its fleet, adjusting rates, and maintaining adequate occupancy levels and margins. The agency projects that net revenue will total BRL 50 billion this year with an EBITDA of BRL 15 billion. For next year, Fitch estimates net revenue will reach BRL 54 billion and EBITDA will reach BRL 17 billion.

Regarding leverage, Fitch stated that Localiza can deleverage if free cash flow turns positive, even in an environment with high interest rates for an extended period. The agency added that the company's strategy to resume fleet growth will dictate the pace of its deleveraging.