Fitch Ratings has affirmed
Fitch has also affirmed Amaggi Luxembourg International S.a r.l.'s senior debt at 'BB'. The Rating Outlook is Stable.
Amaggi's ratings reflect its strong position in Brazilian agribusiness. They also incorporate the sector's inherent risks: volatile grains prices, exchange rate fluctuations, farmer defaults, climate events, and low trading margins. Margin volatility is partially mitigated by Amaggi's conservative risk management, large scale and business integration.
The Stable Outlook incorporates the company's manageable liquidity and an expected reduction of readily marketable inventories (RMI) net leverage to 3.5x or lower starting in 2025. A temporary increase to about 5.7x in fiscal 2024 was due to increased investments in logistics and lower EBITDA generation from the
Key Rating Drivers
Soybean Recovery in
Stable Prices Despite Trade Tensions: Fitch expects relatively stable prices for soybeans and corn in the international market in 2025 and in 2026, despite trade tensions. Fitch assumes the price of soybeans at
Competitive Structure in
Counterparty Risks: Advances in financing to farmers are provided under strict criteria with the use of CPRs (rural credit notes) for collateral. No single producer represents more than 1.4% of Amaggi's annual origination. As a large agricultural producer with farmlands in different locations, the company follows the development of the crop over different locations in the state.
Recovery of Margins in 2025: Fitch forecasts that EBITDA margins should recover to around 5.4% in 2025 from 3.6% in 2024. The crop failure in
Net Leverage Below 3.5x in 2025: Fitch projects that Amaggi's RMI net-adjusted leverage should strengthen to 3.5x in 2025 and below. Leverage increased to about 5.7x in 2024 due to lower profitability in the trading and farming divisions due to the crop failure in
Peer Analysis
Fitch views Amaggi's business risk profile as weak relative to its peers,
Although Amaggi's consolidated profitability is satisfactory, it remains exposed to the strong competition within the industry, with the presence of important international groups operating with strong credit profiles.
Key Assumptions
Soybeans prices of
Corn prices of
Cotton prices of
Total investments of
RATING SENSITIVITIES
Factors That Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
Loss of business diversification;
RMI-adjusted net leverage (RMI adjusted total net debt to operating EBITDA) sustained above 3.5x range on a sustainable basis;
Liquidity ratio (cash and marketable securities+RMI+account receivables/Total short liabilities) below 0.8x at year-end;
RMI-Adjusted EBITDA/Interest Paid below 2.75x;
Secured debt/Ebitda above 2.5x;
A multi-notch downgrade of
Factors That Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
Improved scale and geographical diversification;
RMI-adjusted net leverage (RMI adjusted total net debt to operating EBITDA) below 2.5x range on a sustained basis;
Liquidity ratio (cash and marketable securities+RMI+account receivables/Total short-term liability) above 1x on a sustainable basis;
Secured debt/EBITDA below 1x.
Liquidity and Debt Structure
Amaggi has adequate financial flexibility. The company has access to diversified sources of external liquidity for short-term working capital along with cash, short-term marketable securities, and high levels of liquid RMI.
As of
Issuer Profile
Amaggi is
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Click here to access Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in our credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included.
ESG Considerations
The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.
RATING ACTIONS
Entity / Debt
Rating
Prior
Amaggi Luxembourg International S.a r.l.
senior unsecured
LT
BB
Affirmed
BB
LT IDR
BB
Affirmed
BB
LC LT IDR
BB
Affirmed
BB
Natl LT
AA+(bra)
Affirmed
AA+(bra)
Page
of 1
VIEW ADDITIONAL RATING DETAILS
Additional information is available on www.fitchratings.com
PARTICIPATION STATUS
The rated entity (and/or its agents) or, in the case of structured finance, one or more of the transaction parties participated in the rating process except that the following issuer(s), if any, did not participate in the rating process, or provide additional information, beyond the issuer's available public disclosure.
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