A complete list of BRF's current ratings follows at the end of this release.
KEY RATING DRIVERS
Strong Business Profile:
BRF S.A. (BRF) is one of
Strong Cash Generation:
Fitch expects BRF to generate more than
BRF has completed many streamlining initiatives that will reduce costs and increase operating efficiencies. These measures included reducing management layers and significantly reducing the number of SKUs destined for the domestic market. To enhance revenues, BRF is rolling out its go-to-market (GTM) strategy in its domestic market by expanding the number of points of sale and launching new products and marketing campaigns to increase sales and brand awareness.
Event Risks Remain:
While Fitch expects BRF to focus on improving efficiency and securing its market share in
Improved Credit Metrics:
In light of the strong FCF generation projected in 2014, Fitch expects BRF's net leverage to decrease toward or below 1.5x in 2014. The projection does not include any major divestments or acquisitions. BRF's rating headroom is strong for the 'BBB-' and 'AA+(bra)' ratings; however, Fitch believes that the company will leverage up through acquisitions or additional cash disbursements to shareholders in the near- to medium-term in order to be in line with its stated financial policy of 2.0x net leverage.
A rating downgrade could be triggered by a substantial deterioration in BRF's operating margins and FCF generation. This, coupled with market share erosion beyond anticipated levels from competitive pressures and/or a net leverage increase of above 3.0x (3.5x on gross) from a large debt-financed acquisition, could result in negative rating actions.
An upgrade could occur if BRF continues to maintain strong FCF generation and market share in
Fitch has affirmed BRF as follows:
--Foreign & local currency IDR at 'BBB-';
--Notes due 2018, 2022, 2023, 2024 at 'BBB-';
--Notes due 2020 issued by
--Notes due 2017 issued by
In addition, Fitch has upgraded BRF's national rating to 'AA+ (bra)' from 'AA(bra)'.
The Rating Outlook is Stable
Additional information is available at 'www.fitchratings.com'.
--'Corporate Rating Methodology' (
Corporate Rating Methodology - Including Short-Term Ratings and Parent and Subsidiary Linkage
Source: Fitch Ratings
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