NEW YORK — Following a review of the company’s credit ratings, Grupo Bimbo SAB de CV’s senior unsecured ratings were reaffirmed by Moody’s Investors Services at Baa2. The ratings for Bimbo’s subordinated perpetual notes were reaffirmed at Ba1, and the company’s rating outlook is stable.
In its update issued Nov. 1, Moody’s said the Baa2 rating reflected Bimbo’s “prudent financial policies and strong credit quality, supported by its position as the largest baked foods company in the world, with a “best-in-class distribution infrastructure in its key markets.”
Moody’s also credited a history by Bimbo of effectively integrating acquisitions in the rating. Challenges Bimbo faces cited by the ratings agency includes strong commodity prices, including wheat. Higher costs could weigh on margins, precipitating further price increases, which, in turn, “may slow sales volumes growth.” Moody’s said Bimbo’s size makes it less vulnerable to supply chain disruptions.
Commenting on Bimbo’s recent acquisition of St Pierre Groupe, Moody’s noted that the acquisition was completed without the company’s net leverage rising above the 2.0 times adjusted EBITDA, a ratio that prevailed in 2021.
Moody’s also was impressed by Bimbo’s most recent operating performance.
“Despite to higher raw material costs and inflation, Bimbo was able to hold to its margins,” the agency said. “Bimbo reported EBITDA margin for the last twelve months ended in September 2022 of 13.6%, in line with the average for the 2019 – 2021 period. Through 2023, Moody's believes margins will remain under pressures given persistent cost and inflationary pressures, and weakening consumer demand in Bimbo's main markets. Still, the company would be able to continue to reduce debt with proceeds from the sale of Ricolino.“On November 1, 2022, Bimbo closed the agreement with Mondelez International, Inc. (Baa1 stable) to sell Ricolino, a leading player in the confectionery category in Mexico for an enterprise value of $1.4 billion. Bimbo plans to use the proceeds mainly to reduce debt and fund capital investments,” Moody’s said.