Fitch Ratings on May 8 affirmed the long-term foreign and local currency issuer default ratings of Grupo Bimbo SAB de CV at BBB, citing the Mexican company's position as a leading global producer of baked goods, among other reasons.
The rating agency also affirmed Grupo Bimbo's national long-term rating at AA+(mex) and kept the group's rating outlooks stable.
Fitch highlighted the company's portfolio of leading brands, extensive distribution network in key markets, and geographically diversified operations. The agency added that the rating affirmation also took into account the gradual recovery of Grupo Bimbo's leverage metrics and Fitch's expectation that adjusted gross debt-to-EBITDAR will continue to rise to about 3.0x and its adjusted net debt-to-EBITDAR to 2.9x in the next 12 to 24 months.
Grupo Bimbo operates in Mexico, the U.S., Canada, Latin America, Europe and in some markets in Asia and Africa. Fitch said the company maintained relatively stable market positions across its territories despite tight competition in the U.S., Canada and Iberia. The agency said Grupo Bimbo's competitive edge includes its position as a low-cost producer and an extensive distribution network among its main markets.
Fitch forecasts Grupo Bimbo's consolidated revenues to grow annually by about 5% in 2019 and 2020. However, the agency predicts headwinds to continue from weak private label volumes in the U.S., a tough economic environment in Argentina and challenging operations in Brazil.
The agency also expects Grupo Bimbo's EBITDA margin to be about 11% in 2019 and 2020 and for the company to pay dividends of approximately 2.1 billion Mexican pesos in 2019 and 2.2 billion pesos in 2020.
Fitch said it does not forecast positive rating actions in the short to medium term. The rating agency said it could assign a negative rating action if it sees sustained deterioration in Grupo Bimbo's revenue growth and profitability margins, negative free cash flow margin over its business cycle and significant debt-financed acquisitions.
As of May 8, US$1 was equivalent to 19.05 Mexican pesos.