S&P Global Ratings: Saudi Food And Beverages Group Almarai Rated ’BBB-/A-3’; Outlook Stable

Rating Action Overview

• Almarai is a Saudi Arabia-based food and beverages producer, with revenues of Saudi Arabian riyal (SAR) 13.7 billion ($3.7 billion) in 2018.

• Our analysis of Almarai's business balances the company's leading market positions in Saudi Arabia and the GCC region, well-known local brands, extensive distribution network, good product diversity, and a high and relatively stable profitability for the sector against its high geographical concentration to Saudi Arabia, which is seeing moderate economic growth and a capital expenditure(capex)-intensive business model.

• We project free operating cash flows of SAR1.2 billion-SAR1.3 billion annually, driven by stable earnings and lower expansion investments than in previous years, and its S&P Global Ratings-adjusted debt leverage should remain around 3.0x-3.2x in 2019-2020, assuming a consistent financial policy.

• We are assigning our 'BBB-' long-term and 'A-3' short-term issuer credit ratings to Almarai.

• The stable outlook reflects our view that Almarai's operating performance should remain stable over the next two years, with low revenue growth offset by solid pricing power and cost-saving initiatives.

S&P Global Ratings' Primary Credit Analyst:
Maxime Puget, Paris (33) 1-4075-2577; maxime.puget@spglobal.com

S&P Global Ratings' Secondary Contact:
Sapna Jagtiani, Dubai + 97143727122; sapna.jagtiani@spglobal.com

Media contact:

Faduma Muse
SENIOR ACCOUNT EXECUTIVE
HANOVER MIDDLE EAST
Office 207/208, Thomson Reuters Building 01, Dubai Media City
M: +971 55 636 0426
www.hanovercomms.com