TRIS Rating Co., Ltd. has affirmed the company and issue ratings of Berli Jucker PLC (BJC) at “A+” with “stable” outlook. The ratings reflect solid market positions in key operating segments with a portfolio of strong brand names, cost competitiveness due to economies of scale in packaging and tissue paper manufacturing, and an experienced and capable management team. The ratings also take into consideration the company’s diversified business portfolio and strong relationships with suppliers and clients. These factors are partially offset by the highly competitive operating environment, especially in the consumer products sector, exposure to commodity price fluctuations, and aggressive business expansion strategies.
The “stable” outlook reflects the expectation that BJC will continue to maintain its competitive
strengths through economies of scale, product innovation, and the ability to secure substantial orders
of glass bottles from Thai Beverage PLC (ThaiBev), the flagship business of BJC’s major shareholder, the Sirivadhanabhakdi family. BJC is also expected to sustain its profit margins in the intermediate term and expand conservatively without causing leverage to rise significantly.
TRIS Rating reported that BJC’s business history in Thailand dates back to over a century. A major transformation happened in 2001 when the TCC Group, an investment holding company under the helm of the Sirivadhanabhakdi family, became BJC’s major shareholder. The key businesses of BJC comprise packaging, consumer products, and technical and industrial products. In 2007, total revenues reached Bt19,162 million. The average annual sales growth rate over the past five years was 10%. In 2007, the packaging segment represented 42% of total revenues, with consumer products at 32%, and technical and industrial products at 26%. BJC’s solid business profile is enhanced by diversity. The cash flows in the packaging segment are stabilized as an affiliate of the major shareholder group is the largest customer, accounting for over 40% of packaging revenues. Stability is enhanced by a mix of end markets served, in which one-third of revenue is from the highly stable packaged food segment. The company is one of the top two Thai producers of glass bottles, aluminum cans, tissue paper, and snacks, yielding benefits from economies of scale in terms of production, bargaining power with suppliers and distributors, and product development costs. Technical support from leading global packaging companies, effective cost saving initiatives, and strong brand equity in consumer products underscore the company’s competitive edge against peers. TRIS Rating sees that growth in healthcare segment, a key contributor in the technical and industrial unit, is expected to remain robust and provide a good balance to the overall portfolio of BJC.
TRIS Rating said that BJC’s financial profile is characterized by highly stable cash flows, strong liquidity, and a moderate level of leverage. Earnings before interest, tax, depreciation and amortization (EBITDA) margins over the past five years were rather stable, ranging from 13% to 16%, though they have been trending downward due to pressures from intense competition, rising raw material costs, and higher energy prices. The margin abruptly dropped in the first quarter of 2008, partly due to the maintenance of a glass bottle furnace. The total debt to capitalization ratio stood at 35.6% as of March 2008, but is expected to increase in the intermediate term due to additional borrowing required to support future expansions. The funds from operations to total debt ratio was 12.4% (non-annualized) for the first quarter of 2008 while the EBITDA interest coverage ratio was 14.0 times. Despite the expectation that cash flow protection measures will weaken over the medium term, BJC’s financial profile remains acceptable on the back of its strong business profile and cash flow generating capability at about Bt3,000 million per annum. Key rating concerns are rising production cost and the aggressive expansion policy. Both are likely to exert pressures on margins, leverage, and operating risk in the medium term. -- End
Berli Jucker PLC (BJC)
Company Rating: Affirmed at A+
Issue Rating:
BJC113A: Bt3,030 million senior debentures due 2011 Affirmed at A+
Rating Outlook: Stable
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Copyright 2008, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any e
The “stable” outlook reflects the expectation that BJC will continue to maintain its competitive
strengths through economies of scale, product innovation, and the ability to secure substantial orders
of glass bottles from Thai Beverage PLC (ThaiBev), the flagship business of BJC’s major shareholder, the Sirivadhanabhakdi family. BJC is also expected to sustain its profit margins in the intermediate term and expand conservatively without causing leverage to rise significantly.
TRIS Rating reported that BJC’s business history in Thailand dates back to over a century. A major transformation happened in 2001 when the TCC Group, an investment holding company under the helm of the Sirivadhanabhakdi family, became BJC’s major shareholder. The key businesses of BJC comprise packaging, consumer products, and technical and industrial products. In 2007, total revenues reached Bt19,162 million. The average annual sales growth rate over the past five years was 10%. In 2007, the packaging segment represented 42% of total revenues, with consumer products at 32%, and technical and industrial products at 26%. BJC’s solid business profile is enhanced by diversity. The cash flows in the packaging segment are stabilized as an affiliate of the major shareholder group is the largest customer, accounting for over 40% of packaging revenues. Stability is enhanced by a mix of end markets served, in which one-third of revenue is from the highly stable packaged food segment. The company is one of the top two Thai producers of glass bottles, aluminum cans, tissue paper, and snacks, yielding benefits from economies of scale in terms of production, bargaining power with suppliers and distributors, and product development costs. Technical support from leading global packaging companies, effective cost saving initiatives, and strong brand equity in consumer products underscore the company’s competitive edge against peers. TRIS Rating sees that growth in healthcare segment, a key contributor in the technical and industrial unit, is expected to remain robust and provide a good balance to the overall portfolio of BJC.
TRIS Rating said that BJC’s financial profile is characterized by highly stable cash flows, strong liquidity, and a moderate level of leverage. Earnings before interest, tax, depreciation and amortization (EBITDA) margins over the past five years were rather stable, ranging from 13% to 16%, though they have been trending downward due to pressures from intense competition, rising raw material costs, and higher energy prices. The margin abruptly dropped in the first quarter of 2008, partly due to the maintenance of a glass bottle furnace. The total debt to capitalization ratio stood at 35.6% as of March 2008, but is expected to increase in the intermediate term due to additional borrowing required to support future expansions. The funds from operations to total debt ratio was 12.4% (non-annualized) for the first quarter of 2008 while the EBITDA interest coverage ratio was 14.0 times. Despite the expectation that cash flow protection measures will weaken over the medium term, BJC’s financial profile remains acceptable on the back of its strong business profile and cash flow generating capability at about Bt3,000 million per annum. Key rating concerns are rising production cost and the aggressive expansion policy. Both are likely to exert pressures on margins, leverage, and operating risk in the medium term. -- End
Berli Jucker PLC (BJC)
Company Rating: Affirmed at A+
Issue Rating:
BJC113A: Bt3,030 million senior debentures due 2011 Affirmed at A+
Rating Outlook: Stable
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Copyright 2008, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any e