GRUPO SUGAL
B86093721
Corporate Rating
ISSUER RATING
Long‐term Rating
Outlook: Stable
First rating date: 24/09/2015
Review date: 12/12/2019
Analysts
Senior Analyst
Javier López Sánchez
jlsanchez@axesor‐rating.es
Chief Rating Officer
Guillermo Cruz Martínez
gcmartinez@axesor‐rating.es
Executive Summary
The following is a detailed Executive Summary which includes the main basis of
the public rating allocated to Grupo Sugal proforma (made up of the companies
OC International Investments, B.V., Sugal and Orfrutal).
OC International Investments, B.V.’s rating (issuing entity) is the same as
Grupo Sugal, sharing the same business profile and an adequate creditworthiness
favoured by the explicit financial support provided by the rest of Grupo Sugal. In
2018, the group showed a turnover of €285M with a corporate NFD/EBITDA ratio
of 1.98x.
Rating rationale
Business profile
▶
Worldwide reference group in the tomato processing sector with a marked
specialist position and a remarkable vertical integration.
Grupo Sugal has a strong track record (operating for more than 60 years), positioned
as the world’s fourth fresh tomato processor and the first company in Europe with a
consolidated position. Furthermore, it is one of the leading fruit pulp producers in
the world.
▶
High geographic diversification in both sales and production levels, being the
only company with presence in both hemispheres.
Grupo Sugal has commercial relationships in all continents. 54% of sales originate in
Europe, 29% in America and 15% in Asia. This high degree of geographic diversification
allows the company to decrease the risk associated with excessive concentration in
any given area and, accordingly, reduces dependency on the macroeconomic
situation.
The group’s production plants are located in Portugal (2), Spain (1) and Chile (2). It is
the only company in the world which is present in both hemispheres, benefiting from
two harvests per year and obtaining higher efficiency levels and less production
dependence on a specific region.
▶
Professionalised management team, optimal customer portfolio and a foreseeable
industry recovery.
The presence of an independent and committed management team that successfully
execute the company’s objectives, alongside a customer portfolio formed by leading
companies in their markets with a solid creditworthiness, favour the growth of its
business. The industry as a whole has suffered a decline during the last years albeit a
moderate recovery is expected for the next years.
Financial profile
▶
Group profits have fallen during the last years.
The tomato paste price has fallen due to the excess offer on the market, which has
impacted negatively on the company’s operating margins (8.9% in 2018 vs. 17.7% in
2016) and results (€1.4M pre‐tax income in 2018 vs €27.2M in 2016). In addition, during
the 1H2019, an EBITDA continues to fall (‐17.6% YoY) as well as its operating margin
(‐1.8pp compared to 2018). Nevertheless, this situation could revert from 2020
onwards thanks to the initial industry recovery which is reflected in the rise in the
volume of contracts formalised during 2019 in the Iberia market with a price increase
of 11% in relation to 2018 (with impact on the turnover of 2020).
This aspect could strengthen the economic‐financial position of the group to meet
the next financial commitments in a reduced capex scenario (maintenance).
Corporate Rating SOLICITED
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GRUPO SUGAL
B86093721
Corporate Rating
▶
High debt levels though mainly tied to the financing of its working capital and
modest capitalisation levels.
During the last financial year, the company has deteriorated its NFD/EBITDA ratio,
reaching a value of 6.8x, derived mainly from the fall of the operative efficiency.
Nonetheless, analysing the nature of the debt, it is worth noting that most of it
comes from the Company’s working capital needs, in which the customers are
financed when the tomato is processed and stocked (sales and stock are fully
insured). Net Corporate debt (excluding working capital funding) represented 1.98x
the group’s EBITDA in 2018.
▶
Positive liquidity in order to honour its future financial commitments.
Sugal shows a positive operating cash generation which, along with the cash
displayed on the balance sheet and the available lines of credit is sufficient to meet
its financial maturities conditioned on the Company attaining its projected FCFs
estimated for the coming years.
Main financial figures
Main financial figures. Thousands of €.
2016
2017
2018
1H2019
18vs17
254,049
254,232
285,246
121,875
12.2%
44,991
36,797
25,469
8,662
‐30.8%
17.7%
14.5%
8.9%
7.1%
‐5.5pp
Pre‐tax
income
27,205
15,324
1,409
‐3,241
‐90.8%
Equity
70,520
59,891
52,010
51,696
‐13.2%
35.4%
26.1%
24.9%
21.2%
‐1.2pp
NFD
189,818
214,755
173,847
218,224
‐19.0%
Working
Capital Debt
145,507
155,399
123,370
176,719
‐20.6%
Corporative
Debt
53,975
73,724
85,298
66,815
15.7%
4.2x
5.8x
6.8x
‐
1.0x
54,853
12,850
66,461
‐
417.2%
9,664
14,368
34,822
25,310
142.4%
Turnover
EBITDA
EBITDA margin
Equity/NFD
NFD/ EBITDA*
Operating
Cash Flow
Cash
*The NFD/EBITDA ratio for 1H2019 has not been calculated given the seasonal component of the figures that make it
up and could distort the final value for the full year 2019.
Outlook
In Axesor Rating’s opinion, the outlook for this rating is deemed stable due to the market
price recovery which has been reflected since 2019 and could have a positive impact in
coming years for Sugal’s financial economic situation. Nonetheless, the valuation is
conditioned to the total recovery and consolidation of the positive trend in the business
and results reached.
Corporate Rating SOLICITED
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GRUPO SUGAL
B86093721
Corporate Rating
Regulatory information
Sources of information
The credit rating assigned in this report has been requested by the rated entity, which has also taken part in the process. It is based on private information as well as
public information. The main sources of information are:
1.
2.
3.
4.
Annual Audit Reports.
Corporate Website.
Information published in the Official Bulletins.
Rating book provided by the Company.
The information was thoroughly reviewed to ensure that it is valid and consistent, and is considered satisfactory. Nevertheless, Axesor Rating assumes no responsibility
for the accuracy of the information and the conclusions drawn from it.
Additional information
The rating was carried out in accordance with Regulation (EC) N°1060/2009 of the European Parliament and the Council of 16 September 2009, on credit
rating agencies, and in accordance with the Corporate Rating Methodology and Outlook Methodology that can be consulted on www.axesorrating.com/en/about-axesor/methodology and according to the Long-term Corporate Rating scale available at www.axesor-rating.com/en/about-axesor/ratingscale.
Axesor publishes data on the historical default rates of the rating categories, which are located in the central statistics repository CEREP, of the European
Securities and Markets Authority (ESMA).
In accordance with Article 6 (2), in conjunction with Annex I, section B (4) of the Regulation (EC) No 1060/2009 of the European Parliament and of the Council
of 16 September 2009, it is reported that during the last 12 months axesor has not provided ancillary services to the rated entity or its related third parties.
The issued credit rating has been notified to the rated entity, and has not been modified since.
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