Fitch Ratings has affirmed the Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) of
Fitch has also affirmed the company's national scale ratings at 'AA+(cl)'. The Rating Outlook is Stable.
The ratings reflect Andina's resilient operating performance, maintaining strong credit metrics despite challenging economic conditions. The ratings also factor in Andina's solid business position due to the strong brand equity of Coca-Cola.
Key Rating Drivers
Stable Leverage: Fitch projects gross and net leverage to remain steady at around 2.0x and 1.4x in the next two years, based on positive free cash flow and resilient EBITDA generation. FCF generation is expected to be neutral positive in 2023, considering dividend payments of around
High Argentine and Brazilian Exposure: The ratings factor in Andina's significant exposure of EBITDA generation to
Resilient Business Profile: Andina's strong brand portfolio supports revenue visibility and the stability of its cash flow generation. Fitch forecasts low single digit growth in volumes in 2023-2026, despite weak macro conditions in most of the company's operating environments. We expect EBITDA margin to reach 17%to 18% over the next three years, assuming the company transfers higher cost inflation to final prices while improving product mix in
Equity Rating: Andina's equity rating is based on its long track record in the
Derivation Summary
Andina's net leverage is higher when compared to its peers Arca Continental (Arca; A/Stable) and Coca-Cola FEMSA (KOF; A/Negative), which are at about 0.5x-1.0x. Andina, Arca and KOF benefit from the Coca-Cola brand, which allows them to reach high market share in the countries where they operate. Andina's credit profile is tempered by the weak sovereign ratings of
Key Assumptions
Volume growth in line with GDP growth in the countries the company is present;
EBITDA margin averaging 17.6% during the 2023-2026 period;
Extraordinary dividend announced for 2023 for around
The
Short-term investments of around
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive rating action/upgrade:
Higher Ebitda contribution from investment grade countries;
Gross and Net leverage consistently below 2.0x and 1.5x, respectively;
A robust product diversification towards multiple beverage categories, different consumption patterns, consumer groups and a wide range of pricing points.
Factors that could, individually or collectively, lead to negative rating action/downgrade:
A downgrade of
Gross and Net leverage above 3.0x and 2.5x, respectively for a sustained period of time.
Best/Worst Case Rating Scenario
International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from '
Liquidity and Debt Structure
Ample Liquidity: Andina's liquidity is adequate. The company reported cash of
Issuer Profile
Andina is the third largest Latin American Coca-Cola bottler by volume and the seventh largest Coca-Cola bottler worldwide. It produces, distributes and markets Coca-Cola soft drinks along with juices and mineral waters in
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.
ESG Considerations
Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This 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. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg
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