JBS ratings return to 'stable'
Oct. 23, 2013
by Meat&Poultry Staff
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NEW YORK – Fitch Ratings assigned the ratings of JBS S.A. and its affiliates a Stable Rating Outlook, removing the company from Rating Watch Negative. The ratings agency placed JBS on Rating Watch Negative in June due to the company's acquisition of Seara Brasil and Zenda leather businesses from Marfrig Alimentos S.A. Fitch affirmed JBS's Issuer Default Ratings and notes ratings at 'BB-'.
"JBS will have to make significant initial cash investments in working capital in order to strengthen Seara's operations, address its logistics issues and build upon the strength of the brand in order to turn the business into a positive FCF division in the medium term," Fitch said in its review. "However, JBS has demonstrated its capacity to integrate several acquisitions in the past. The Seara transaction will increase JBS's export capacity and its footprint in the protein business in Brazil from R12 billion to about $15 billion."
The review noted that JBS's credit ratings are supported by the company's strong business profile as the world's largest beef and leather producer. JBS's product and geographic diversification help mitigate risks associated with animal disease and trade restrictions.