Riyadh – Mubasher: Moody's Investors Service has assigned a ‘Baa3’ rating to Saudi company Almarai with a stable outlook.
This rating reflects Almarai’s leading positing in the Saudi market and its increased earnings before interest, taxes, depreciation, and amortisation (EBITDA), the international rating agency said on Thursday.
“Almarai's Baa3 issuer rating is supported by its strong market positions in products such as milk, cheese, butter, bakery, its well-recognised brands, its high margins thanks to a vertically integrated supply chain, manufacturing efficiencies and strict control of operating expenses, [and] its good liquidity and a prudent financial policy,” Moody's explained in its statement.
Moody’s further added that the stable outlook reflected its expectations that the food and beverage company’s credit profile would survive the difficult conditions in the market.
The current rating may be changed if Almarai succeeded in cutting its debt-to-EBITDA ratio over 3.5 times while keeping the adjusted retained cash flow (RCP)/debt ratio above 30%, the rating agency noted.
“A downgrade could be triggered if adjusted debt/EBITDA remains above 3.5 times or adjusted RCF/net debt remains below 20% for an extended period," it said noting that a decline in Almarai's profitability or liquidity along with increased payouts to shareholders and large debt-financed acquisitions may prompt a downgrade.
Almarai's net profit after zakat and taxes fell in the fourth quarter of 2018 to SAR 369.6 million ($98.54 million) from a year ago, it said recently.
