May 19, 2024

Wall Street Rewards Nutresa with ‘AAA(col)’ Bond Rating

Medellin-based multinational foods giant Grupo Nutresa announced May 19 that it won an “AAA(col)” rating from Wall Street bond rater Fitch thanks to its “strong competitive position in its relevant markets” as well as moderate leverage, geographic diversification and “robust” cash flow “across the business cycle.”

“The company’s competitive position and its brand capital have allowed it to defend its margins of profitability,” according to Fitch.

“This is in the midst of a challenging economic environment, characterized by the inertia of a weakened exchange rate, rising inflation, high interest rates and deceleration of private consumption.”

Fitch also indicated that it expects a recovery in earnings before interest, taxes, depreciation and amortization (EBITDA) margin when market consumption conditions improve.

Last month, Nutresa announced that its first-quarter (1Q) 2017 net income dipped 8.3% year-on–year, to COP$139 billion (US$47.6 million), mainly because of accounting losses for its investments in neighboring Venezuela – a country ruled by a socialist government that has wrecked the entire economy.

Nutresa’s 1Q 2017 sales inside Colombia rose 4.9% year-on-year, while EBITDA hit COP$264 billion (US$90 million), according to the company.

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