TRIS Rating Co., Ltd. has affirmed the rating of Nestle (Thai) Ltd.'s ("NTH") Bt5,000 million guaranteed debentures (NTH086A) at "AAA". These debentures are guaranteed unconditionally and irrevocably by Nestle S.A. (Nestle), which owns 100% of NTH. The issue rating is based on the credit quality of the Guarantor or Nestle, which is rated "AAA" and "Aaa" by Standard and Poor's (S&P's) and Moody's Investors Service (Moody's) respectively. The Guarantor has agreed to guarantee the payment of a maximum amount equal to Bt5,500 million. The guarantee is governed by Swiss law. Although the Guarantor shall not be liable for the guaranteed debentures in the event that the intervention of any government agency of Thailand expropriates or nationalizes the assets of NTH or the Issuer, TRIS Rating believes that such event is highly unlikely.
TRIS Rating reported that Nestle S.A., the ultimate holding company of Nestle group, is a public company listed in the Swiss Exchange and the stock exchanges in London and Paris. S&P and Moody's have rated Nestle S.A. as "AAA" and "Aaa", respectively. In the view of Standard & Poor's, Nestle S.A.'s rating reflects the group's leading position in branded and packaged food in the global marketplace, strong and stable cash generation, an extremely diversified product portfolio, a geographically-diverse customer base and management's conservative financial policy. The rating also considers Nestle's financial profile, which has declined and is considered relatively weak for "AAA" level, following the acquisition of Ralston Purina in 2001. In addition, the rating takes into account the stable demand and intense competition in the branded food industry, which will pressure the margin of the industry. The negative outlook from S&P reflects a relatively weak financial profile after making large debt-funded acquisitions in 2001.
TRIS Rating said Nestle is the market leader in the branded and packaged food industry. Many of the group's products, which are mainly in the food and beverage sectors, have strong market shares and Nestle is a leader in the global market for a wide variety of products such as: soluble coffee, mineral water, powdered milk, infant-nutrition products, chocolate and confectionery, frozen prepared dishes and pet care. The group also benefits from very strong brands. Its six global brands, Nestle, Nescafe, Nestea, Maggi, Buitoni and Purina represent around 70% of consolidated sales. Nestle's products are sold worldwide in more than 87 countries. In 2003, Europe contributed 33% of consolidated sales, whereas the Americas and AOA (Asia, Oceania and Africa) generated about 32% and 16% respectively. The remainder of Nestle's sales was generated from the water division and other activities. Thirty-three percent of Nestle's earning before interest, tax and amortization (EBITA) margin came from the Americas, followed by Europe 28% and AOA 20%, while the remainder of its profits derived from its water division and other activities.
Although Nestle delivered real internal growth (RIG or volume growth) down from 3.4% in 2002 to 2.2% in 2003, Nestle maintained organic growth (volume and pricing growth) around 5% during 2002-2003. Consolidated sales increased continuously from SFr81,422 million in 2000 to SFr89,160 million in 2002 and slightly dropped to SFr87,979 million in 2003 due to the variation of exchange rate. Its operating profit margin (before depreciation and amortization) has slightly improved from 15.0% in 2001 to 15.5% in 2003, while EBITDA to net interest coverage increased from 22.9 times to 23.5 times. In addition, Nestle's financial profile improved, with net debt to capitalization declining to 27.5% and FFO to net debt increasing to 75.3% in 2003, TRIS Rating said. -- End
Nestle (Thai) Ltd. (NTH) Issue Rating: NTH086A: Bt5,000 million guaranteed debentures due 2008 Affirmed at AAA Rating Outlook: Stable
TRIS Rating reported that Nestle S.A., the ultimate holding company of Nestle group, is a public company listed in the Swiss Exchange and the stock exchanges in London and Paris. S&P and Moody's have rated Nestle S.A. as "AAA" and "Aaa", respectively. In the view of Standard & Poor's, Nestle S.A.'s rating reflects the group's leading position in branded and packaged food in the global marketplace, strong and stable cash generation, an extremely diversified product portfolio, a geographically-diverse customer base and management's conservative financial policy. The rating also considers Nestle's financial profile, which has declined and is considered relatively weak for "AAA" level, following the acquisition of Ralston Purina in 2001. In addition, the rating takes into account the stable demand and intense competition in the branded food industry, which will pressure the margin of the industry. The negative outlook from S&P reflects a relatively weak financial profile after making large debt-funded acquisitions in 2001.
TRIS Rating said Nestle is the market leader in the branded and packaged food industry. Many of the group's products, which are mainly in the food and beverage sectors, have strong market shares and Nestle is a leader in the global market for a wide variety of products such as: soluble coffee, mineral water, powdered milk, infant-nutrition products, chocolate and confectionery, frozen prepared dishes and pet care. The group also benefits from very strong brands. Its six global brands, Nestle, Nescafe, Nestea, Maggi, Buitoni and Purina represent around 70% of consolidated sales. Nestle's products are sold worldwide in more than 87 countries. In 2003, Europe contributed 33% of consolidated sales, whereas the Americas and AOA (Asia, Oceania and Africa) generated about 32% and 16% respectively. The remainder of Nestle's sales was generated from the water division and other activities. Thirty-three percent of Nestle's earning before interest, tax and amortization (EBITA) margin came from the Americas, followed by Europe 28% and AOA 20%, while the remainder of its profits derived from its water division and other activities.
Although Nestle delivered real internal growth (RIG or volume growth) down from 3.4% in 2002 to 2.2% in 2003, Nestle maintained organic growth (volume and pricing growth) around 5% during 2002-2003. Consolidated sales increased continuously from SFr81,422 million in 2000 to SFr89,160 million in 2002 and slightly dropped to SFr87,979 million in 2003 due to the variation of exchange rate. Its operating profit margin (before depreciation and amortization) has slightly improved from 15.0% in 2001 to 15.5% in 2003, while EBITDA to net interest coverage increased from 22.9 times to 23.5 times. In addition, Nestle's financial profile improved, with net debt to capitalization declining to 27.5% and FFO to net debt increasing to 75.3% in 2003, TRIS Rating said. -- End
Nestle (Thai) Ltd. (NTH) Issue Rating: NTH086A: Bt5,000 million guaranteed debentures due 2008 Affirmed at AAA Rating Outlook: Stable