San Miguel Food and Beverage Inc. (SMFB) has retained its highest Issue Credit Rating of PRS Aaa, with a stable outlook from Philippine Rating Services Corporation (PhilRatings) for its P5-billion outstanding fixed-rate bonds.
Obligations rated PRS Aaa are of the highest quality with minimal credit risk and the obligor’s capacity to meet its financial commitment on the obligation is extremely strong. A stable outlook means the rating is likely to be maintained in the next 12 months.
PhilRatings said it took into account SMFB’s strong brand equity and its leading market positions, core businesses and realized synergies as part of the San Miguel Group, and as a result of the consolidation of its food and beverage businesses under SMFB, coupled with the company’s highly-experienced management team.
The ratings agency also factored in the company’s conservative financial position considering the capital intensive nature of its businesses, its improving profit performance and healthy cash flow generation, and the prolonged economic and market uncertainty caused by the ongoing COVID-19 pandemic and the African Swine Fever (ASF) outbreak.
In the last five years, SMFB has maintained a conservative capitalization structure. While debt-to-equity (DE) ratio and total debt-to-capitalization ratio in 2020 were both higher than their 2019 levels due to the issuance of peso retail bonds by the company, these remained well-managed considering the capital-intensive nature of the company’s businesses.
As of end September 2021, the company’s DE ratio remained well below the 1:1 mark, giving the company ample room to source cash from operations and/or incremental debt, if needed.
In 2020, SMFB saw the full impact of the COVID-19 pandemic on its businesses but PhilRatings noted that the company experienced a strong rebound in the second half of 2020 as its net income more than doubled from P7.3 billion in the first half of the same year to P15.1 billion.
SMFB executed solid strategic pivots that allowed the company to address the challenges of the COVID-19 pandemic and ASF on its businesses.
In the first nine months of 2021, total revenues grew by 14 percent, from P194.6 billion in the same period in 2020, to P221.7 billion, on account of marked improvement in revenues across all businesses under SMFB.
As a result of this, SMFB’s net income rose by 68 percent from P14.4 billion in the same period in 2020 to P24.2 billion.