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17 Mar 2010
Sao Paulo, March 17, 2010 -- Moody's Investors Service has placed on review for possible upgrade the
Baa1 global local currency rating of Companhia de Bebidas das Americas
("AmBev"). AmBev's Baa2 foreign currency issuer rating with a positive
outlook remains unchanged; the rating is constrained by Brazil's
Baa2 long-term foreign currency ceiling with a positive outlook.
"The review of AmBev's Baa1 global local currency rating was prompted
by AmBev's resilient operating performance and prudent financial
policies during the global economic crisis, combined with an overall
improvement of several sovereign ratings where AmBev operates, as
well as, improved credit metrics throughout 2009," explained
Moody's Vice-President Senior Analyst, Soummo Mukherjee.
"The review also reflects the recent change in outlook to positive from
stable of AmBev's 74% owner, Anheuser-Busch
InBev's ("ABI") Baa2 rating, reflecting ABI's
solid execution of the company's de-leveraging plan so far,
which included the numerous asset divestitures, and improved liquidity
profile," added Mukherjee.
AmBev's operation in Brazil , responsible for 63% of
AmBev's total consolidated net revenues and 69% of EBITDA
at the end of 2009, continued to have a very solid operating performance
in both beer and soft-drinks divisions in 2009 when compared to
2008 and helped to offset the challenges faced in Canada and some of the
other markets. Innovations, price increases, market-share
gains in beer and benefits of a good economic environment in Brazil helped
AmBev achieve overall organic revenue growth of 12.4% in
2009 vs. 2008. At the same time, continued productivity
initiatives and successful hedges allowed the company to further reduce
COGS in Brazil by 3% and largely offset the 25% increase
in SG&A resulting from higher accruals for variable compensation,
volume growth and marketing investments to support innovation.
Brazil's EBITDA, as a result, grew by 12.2%
on an organic basis and EBITDA margin expanded by 20bps to 48.8%
for the full-year 2009 vs. 2008.
In Quinsa (16.5% of FY 2009 consolidated revenues and 17%
of EBITDA), despite facing a 1% volume decline year-over-year,
strong revenue management and cost control allowed the company to grow
revenues in BRL by 16% year over year and EBITDA by 22%.
The EBITDA margin, therefore, expanded by 230 bps to 46%
in 2009. The Hila-ex countries (3.4% of consolidated
FY 2009 revenues) continued to be EBITDA negative although it improved
by BRL 44 million to BRL -58 million in 2009 vs. BRL -86.2
million in 2008. Despite difficult market conditions in these countries,
AmBev grew volumes by 11% in this region as a result of better
performances in Peru, Venezuela and the Dominican Republic.
Throughout FY 2009 in light of the difficult global liquidity environment,
AmBev essentially paid off all of its near-term debt maturities
as they came due and thus reduced total adjusted debt by 31.3%
from BRL 11 billion at the end of 2008 to 7.6 billion at the end
of 2009. Meanwhile, its cash balance also increased from
2008 to 2009 by 27.5% from BRL 3.2 billion to 4.1billion
providing the company with excellent liquidity. AmBev achieved
our quantitative upward rating triggers, which included an EBITA/Interest
consistently above 5.5x (9.5x FY 2009) and FCF / Total Debt
of above 20% on a sustainable basis (48.9% FY 2009).
Moody's review will focus on the business plan and financial policies
of AmBev and its 74% voting shares owner, ABI, for
the next few years. The focus will be on the sustainability of
the current improved credit metrics as well as the company's acquisition,
investment and shareholder return strategy (dividends and share-buybacks)
for the next few years.
Moody's last rating action on AmBev was on September 22nd, 2009,
when we upgraded AmBev's foreign currency issuer rating from Baa3 to Baa2
with a positive outlook in conjunction with Moody's upgrade of Brazil's
foreign currency country ceiling.
Rating placed under review for possible upgrade are as follows:
- Global local currency issuer rating: Baa1
- BRL senior unsecured debentures due in July 2012: Baa1/Aaa.br
- Brazilian National Scale Issuer Rating: Aaa.br
Ratings unchanged are as follows:
- Foreign currency issuer rating: to Baa2
Outlook for the foreign currency issuer rating: positive
The principal methodology used in rating AmBev was Moody's Global Alcoholic
Beverage Rating Methodology (published in September 2009) and available
on www.Moodys.com in the Rating Methodologies sub-directory
under the Research & Ratings tab. Other methodologies and factors
that may have been considered in the process of rating this issuer can
also be found in the Rating Methodologies sub-directory on Moody's
website.
Companhia de Bebidas das Américas (AmBev), based in São
Paulo, Brazil, is the largest brewer in Latin América
and the fourth largest worldwide in terms of volume. It produces,
distributes, and markets beer, soft drinks, and other
beverage products in 14 countries across the Americas. AmBev is
also Pepsico's largest bottler outside the United Sates. The company's
controlling shareholders are Anheuser-Bush InBev, the World's
largest brewing company, with 74.0% of AmBev's voting
shares and 61.8% of its total shares and the Zerrenner Foundation
(FAHZ) with 16.6% of AmBev's voting shares and 9.3%
of its total shares.
Sao Paulo
Soummo Mukherjee
Vice President - Senior Analyst
Corporate Finance Group
Moody's America Latina Ltda.
55-11-3043-7300
New York
Brian Oak
Managing Director
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's places AmBev's Baa1 rating under review for possible upgrade
No Related Data.
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