S&P upgrades Wimm-Bill-Dann credit rating

By Charlotte Eyre

- Last updated on GMT

Related tags: Baby food, Better, Credit rating

Standard & Poor's announced yesterday that it has raised
its credit ratings on Russian company Wimm-Bill-Dann, after an
improved financial performance in 2006.

The upgrade demonstrates that the Russian dairy market is able to support expanding companies such as Wimm-Bill-Dann, as long as companies are willing to reorganize and restructure organizations. S&P expect Wimm-Bill-Dann to hold on to the improved credit rating and sustain profitability, thanks to corporate streamlining and cost control, the agency said. "The upgrade, which follows our review of Wimm-Bill-Dann's strategic plans and financial forecasts, reflects improvement in the company's creditworthiness, given the continuing positive trend in its operating performance, and an improving financial risk profile,"​ said credit analyst Anton Geyze. Geyze said that he also confident that the dairy firm will sustain profitability, as "efficiency improvement programs will result in better dairy and baby food segment sales, as well as help to offset competitive pressures and relatively weaker performance of the company's juice business." ​ However he also warned that the company's upside potential is limited due to modest diversification, and undermined by its weaker position in non-dairy segments such as baby food and fruit juice. S&P said that it raised the long-term corporate credit to 'BB-', and the national scale ratings to 'AA-', after examination of Winn-Bill-Dann's financial results. The analysts also removed the company from CreditWatch due to the "stable" outlook. Wimm-Bill-Dann announced gross profit of €425m in 2006, a rise of 43.6 per cent over the same period in 2005. The largest growth was in the dairy sector, with sales in 2006 reaching €991m, a rise of 31.6 per cent over the same period the previous year. The group's non-dairy beverage division saw stable growth of just 6.9 per cent, with sales by the end of the year reaching €243m, while baby food revenues grew 33.5 per cent to €88m. Wimm-Bill-Dann has invested heavily in Eastern Europe during recent years, including in untapped markets such as Siberia. In June, it increased its stake in the Obninsk dairy factory, one of Russia'a major production facilities, from 66.33 per cent to 96.45 per cent.

Related topics: Manufacturers, Ingredients

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