TEXT-S&P summary: HMS Hydraulic Machines & Systems Group PLC

June 29 -

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Summary analysis -- HMS Hydraulic Machines & Systems Group PLC ---- 29-Jun-2012

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CREDIT RATING: BB-/Stable/-- Country: Russia

Primary SIC: Pumps and pumping

equipment

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Credit Rating History:

Local currency Foreign currency

16-Jun-2011 BB-/-- BB-/--

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Rationale

The ratings on Russian pump and oil and gas equipment manufacturer HMS Hydraulic Machines & Systems Group PLC (HMS) are primarily constrained by our view of its narrow geographical diversification and the risk inherent in doing business in Russia, which accounts for about 90% of the group's total revenues. The execution risk HMS faces on the delivery of contracts is another ratings constraint. In our opinion, the group's lump sum contracts leave it exposed to potential unexpected cost overruns. This risk is reinforced by HMS Group's concentration on large contracts like those signed on the East Siberia-Pacific Ocean oil pipeline (ESPO) project with OAO AK Transneft (BBB/Stable/--).