Fitch affirms Richard Pieris at ‘A(lka)’/Stable | Daily News


 

Fitch affirms Richard Pieris at ‘A(lka)’/Stable

Fitch Ratings has affirmed Richard Pieris & Company PLC’s (RICH) National Long-Term Rating at ‘A(lka)’. The outlook is stable. At the same time, Fitch has withdrawn RICH’s rating because the rating has been taken private.

The affirmation reflects RICH’s ability to maintain net leverage commensurate with its ‘A(lka)’ rating in the next 12-18 months despite the vulnerability of some of its businesses to the coronavirus pandemic and the resultant economic downturn. We expect operating cash flows from RICH’s supermarket retail business, which accounts for around 45% of group EBIT, and its protected domestic palm-oil plantations to remain resilient in the current environment, offsetting challenges in the export and plastic segment, which are exposed to more volatile end-markets.

RICH had modest rating headroom before the economic downturn, and we expect this, together with its flexibility to cut capex and shareholder returns, to help the company maintain leverage at around 3.0x in the year ending March 2021 (FY21) - the threshold for the current rating - before improving in FY22. However, a deeper or more prolonged impact from the pandemic may pose risks to our expectations.

Fitch is withdrawing the rating of RICH because the rating has been taken private. “We expect supermarket revenue to decline by 15%-20% in FY21, mainly due to weaknesses in 1HFY21.


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