Increased sales volume proves Gruma’s durability.
Mexico’s Monterey Fitch Ratings claims that Gruma SAB de CV’s operations showed resiliency in the face of the coronavirus epidemic and profited from increased sales volume. The BBB long-term foreign and local currency issuer default rating of Gruma was confirmed by the company on August 31.
Additionally, Gruma confirmed its AAA (mex) national long-term rating.
According to Fitch, declines in foodservice have been more than offset by increases in sales of tortillas and maize flour in the retail channel.
“Moreover, even though Gruma has had to pay more for the operations and employee safety, given the rise in sales from the more lucrative retail channel and the increased demand for value-added products, no material pressures on profitability are expected,” Fitch stated.
The company’s solid position as a leading tortilla maker and maize flour miller in the world, aided by well-known brands and regionally diverse activities, is reflected in Gruma’s rating, according to Fitch. Good profit margins, low leverage, and plenty of liquidity characterise the company’s financial profile.
Future operating performance for Gruma is expected to be solid by Fitch in light of the COVID-19 epidemic and expected economic difficulties in the region where the business operates. Fitch anticipates sales growth of over 14% in 2020 and a more moderate 4% in 2021.
According to Fitch, “better product and channel mix sales, a favourable cost input environment, and higher operating leverage—which will counteract pressures from safety initiatives and sales expenses—will improve Gruma’s profitability.”
The ratio of Gruma’s debt to EBITDA is approximately 1.8 times, which Fitch predicted will drop to 1.5 times in the company’s fiscal 2021 absence of significant acquisitions, investments, or shareholder payouts. According to the agency, long-term leverage of 1.5 to 2.0 times EBITDA is the basis for its ratings.