June 5, 2012 / 9:07 PM / 5 years ago

TEXT-Fitch affirms Grupo Bimbo's ratings at 'BBB'

 (The following statement was released by the rating agency)	
 June 5 - Fitch Ratings has affirmed the following ratings of Grupo Bimbo,
S.A.B. de C.V. (Bimbo):	
	
--Issuer Default Rating (IDR) at 'BBB';	
--Local Currency IDR at 'BBB';	
--Senior unsecured notes for USD800 million due 2020 at 'BBB';	
--Senior unsecured notes for USD800 million due 2022 at 'BBB';	
--National Scale long-term rating at 'AA+(mex)';	
--Local Certificados Bursatiles Issuances BIMBO 09, BIMBO 09-2, BIMBO 09U, and
BIMBO 12 at 'AA+(mex)'.	
	
The Rating Outlook is Stable.	
	
Bimbo's ratings are supported by its significant size and scale within the
global bakery industry, strong brand recognition and positioning, and extensive
distribution network that provides a key competitive advantage. The ratings also
consider the company's stable operations with historically low volatility in
revenues and margins, diversified revenue base and positive free cash flow
generation. The ratings are tempered by higher than historical debt levels, as a
result of its recent acquisitions.	
	
The rating affirmations reflect Fitch's expectation that Bimbo's operating
performance will face a challenging year in 2012, due in part to volatility in
commodities prices and exchange rates. Integration of the Sara Lee Fresh Bakery
Business in North America and Sara Lee Spain and Portugal will have a dilutive
effect on Bimbo's consolidated operating margins, and the company will also
incur non-recurrent expenses from the integration.	
	
However, Fitch expects the decline in Bimbo's operating margins to be temporary.
For the latest 12 months (LTM) ended March 31, 2012 the company's estimated
EBITDA margin declined to 10.4% from 12.8% when compared to same period of 2011.
Fitch estimates that the profitability of the company for 2012 will remain at
lower levels than previous years and will gradually recover with the expected
synergies from acquisitions that are planned to be fully reached until 2014.	
	
Bimbo has a sound cash flow generation that can be used to reduce debt and
strengthen its financial position. The company's reported total debt as of March
31, 2012 was MXN42.8 billion and the ratio of total debt to LTM EBITDA was 2.9
times (x). Fitch estimates that the leverage ratio, including the effect of
acquisitions, should be around 2.5x in the following 12 to 18 months. Fitch
considers that a sustained deterioration in the leverage ratio above 3.0x times
could put pressure on the company's credit profile.	
	
The ratings also factor the company's historical generation of positive free
cash flow (FCF - after capital expenditures and dividends), which has averaged
around USD350 million annually during the past five years. Fitch anticipates
that Bimbo's FCF annual generation will be lower in 2012 than in previous given
the expected pressure in operating performance, higher capital expenditures and
cash expenses related to the integration process.	
	
Bimbo has good liquidity and financial flexibility. As of March 31, 2012 the
company had a cash balance of MXN3.8 billion and short term debt of MXN2.4
billion. In addition, Bimbo has USD1.5 billion of undrawn committed revolver
credit facility that expires in December 2016. During the 1Q'12 the company
refinanced a portion of its syndicated loan through the issuance of local debt
for MXN5 billion due in 2018 and senior notes for USD800 million due in 2022,
which improved its debt profile and provided financial flexibility. Bimbo's next
significant debt maturities are in 2014 of MXN5 billions and MXN1.1 billion from
a local issuance and bank loans, respectively.	
	
	
Additional information is available at 'www.fitchratings.com'. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.	
	
Applicable Criteria and Related Research:	
--'Corporate Rating Methodology' (Aug. 12, 2011);	
--'National Ratings Criteria' (Jan. 19, 2011);	
--'Rating Packaged Foods Companies - Sector Credit Factors' (May 12, 2010).	
	
Applicable Criteria and Related Research:	
Corporate Rating Methodology	
National Ratings Criteria	
Rating Packaged Food Companies	
	
 (New York Ratings Team)	
 

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